Loss Run Ordering
Have you ever had a client ask for loss runs? What did you do? You likely got Acord forms updated, and promptly sent out to market. If you’re smart you awaited confirmation that you’re the AOR before sending in loss runs. Underwriters can’t use them, but they can’t unsee them either. With this in mind we’re going to cover some strategic considerations when ordering loss runs for a new business opportunity. Check out the companion article on Managing the Process here.
When it comes to ordering loss runs there are two ways you can do it – ask the insured to order them, or you order them directly from the carrier, on the insured’s behalf. Even in 2022, with all the online portals, very few carriers have them readily available to the insured. If that’s an option, great, just make sure they don’t call their account manager for help navigating the portal. And that is the point. When the insured orders loss runs, the incumbent agent will find out much sooner than they should, and likely take action that will hurt your chances of winning.
Delay the Inevitable
The Sandler submarine runs silent and deep. The longer you’re off radar, the less reactionary options available. This could be the difference between the insured already receiving the renewal policy from the carrier, not uncommon in the small market, and will be flat or slightly up, and will put the incumbent on their heels.
It could be the difference in securing a market that the incumbent agent is also appointed. The more work you’ve done with the market, assuming at some point you declared them, and the effort conveyed to the prospect, and the less time on the clock, the less chance of it being pulled out from under you.
Control Perception & Situation
If the insured is handling loss run procurement, and insists on contacting his or her account manager, use it to your advantage. Emphasize how quick and easy it is for agencies to run these reports. A possible wedge set up so if the incumbent drags their feet, the prospect has to wonder what the hold up is about. The need for a current valuation can be used to delay the tip off here.
Loss history can be divided into two broad categories – no losses, losses. Both present different pros and cons. Assuming a good dialogue with the prospect, and a good relationship with your market, and it falls within your underwriter’s authority, you can have them quote subject to loss runs. This is important considering a risk with no claims will likely be defended, but only if the incumbent is aware it needs to be.
With losses has a broad spectrum. Frequency, severity and loss ratio are the time-tested metrics underwriters use for initial qualification. The more losses, the more important it is to understand historical premium and exposure, and being proactive in presenting the losses to your underwriters for the best reception.
Are there any lingering reserves that stand out. Why are they there? Are you aware of the effect they can have on your cost? Have you received any assistance in managing these accidents and injuries? Claims offer an excellent opportunity to insert wedges while doing the necessary fact finding for your underwriters.
Frame the Situation, Establish Benchmarks
Your prospect’s longevity with the incumbent also becomes more important. Every situation is different and that is why you ask questions, but it’s important to understand how these variables can change the dynamics of the deal. At what loss-ratio does the incumbent leverage the history of their relationship, and more importantly at what loss levels might your prospect feel obligated to honor.
If we’re at such claims’ levels, you are probably not finding coverage gaps, and if you do will your prospect perceive them as significant? If they’re being paid, do you think they will perceive a service issue? Like it or not, cost will be the consideration. Establishing credibility, conveying a high level of service and the benefit you the agent bring is the reason you’ll be considered.
Have you established what is acceptable, all things being equal? Have you laid the ground work – does the prospect look at this as a business decision? Have you shifted their focus to the big picture? We are discussing one transaction, made annually. Insurance is cyclical, next year is a new opportunity. A professional agent should understand this. If the incumbent attempts to leverage their relationship, it is the difference between the prospect thinking they should give the incumbent a second chance or questioning if they have their own intentions or the insured’s in mind.