Reading a Workers' Comp Loss Run — What Underwriters Actually See

Loss runs drive workers comp underwriting more than any other input. The application gives the underwriter context. The X-Mod gives them a summary number. The loss run tells them the actual story. An underwriter who reads a 1.45 mod alongside a clean loss run with three closed claims sees a fundamentally different account than one looking at the same mod backed by twelve open claims with reserves climbing.

Most retail agents treat loss runs as paperwork — request them, attach them to the submission, move on. The agents who win specialty placements consistently read the loss run before they send it, understand what it's saying, and prepare a narrative that addresses what the underwriter will see. This guide walks through how underwriters actually read loss runs, what the numbers mean, and how to use what you find to your client's advantage.

What's in a loss run

Loss runs come from the carrier's claims system and follow a fairly standard format across carriers, with variations in how data is presented. The core fields you'll always see:

• Claim number and date of injury — anchors the claim in the policy period.

• Body part / nature of injury — drives both medical cost and indemnity exposure.

• Class code — confirms the worker's classification at time of injury.

• Paid medical and paid indemnity — actual dollars spent on medical treatment and lost wages / disability benefits to date.

• Outstanding reserves — the carrier's estimate of remaining cost.

• Incurred total — paid + outstanding reserves.

• Status — Open, Closed, or Reopened, and a litigation flag.

The aggregate at the bottom of the run gives totals by category and a grand total. Most loss runs also include an experience-period summary showing totals by policy year over the last three to five years.

Primary vs excess losses — the lever that drives the mod

The single most important concept in reading a loss run for mod purposes is the split between primary and excess losses. The X-Mod formula weighs primary losses (the first dollars of each claim) much more heavily than excess losses (the tail beyond a state-specific threshold).

The threshold varies by state but typically falls somewhere between $5,000 and $17,000. Every claim contributes its primary portion to the mod calculation at full weight. The excess portion above the threshold contributes at a heavily discounted rate.

Practical implication: a loss run with frequency (many small claims) hurts the mod far more than a loss run with severity (one big claim). A client with eight $4,000 medical-only claims has $32,000 of fully-weighted primary loss in the formula. A client with one $200,000 catastrophic claim has roughly $15,000 of primary loss (the threshold amount) plus excess that gets discounted to near-zero in the formula. The single big claim looks worse on the spreadsheet but moves the mod less.

When you read a loss run, the first thing to assess is the frequency-severity profile. A frequency-heavy book is harder to fix than a severity-heavy book.

Reserves — the carrier's bet on where the claim is going

Reserves are the carrier's estimate of how much they expect to pay on the claim beyond what they've already paid. A claim with $50,000 paid and $100,000 reserves means the carrier expects total cost to be around $150,000. The mod calculation uses incurred (paid + reserves), not just paid.

Two reserve patterns matter for the underwriting:

• Adequate vs aggressive reserving. Some carriers reserve aggressively (high estimates that get adjusted down as claims develop); others reserve conservatively (lower estimates that get adjusted up). The aggressive-reserving carrier inflates incurred totals and can push the mod up artificially.

• Stagnant reserves on aging claims. A claim that's been open three years with the same reserves the entire time is a candidate for reserve reduction — the carrier just hasn't updated. A claims advocate review can produce reserve reductions that lower the mod without changing actual loss experience.

If you spot stagnant high reserves on aging claims, that's an opportunity. Engage a claims advocate or push the carrier directly for a reserve review before the next mod calculation period.

Claim status — what Open really means

Most loss runs show three claim statuses: Open, Closed, Reopened. The status field is more nuanced than it looks.

• Open with regular medical activity — claim is genuinely active; treatment ongoing; reserves likely accurate.

• Open with no recent activity (no medical bills in 6+ months) — candidate for closure. Reserves should be released. Reach out to the adjuster.

• Open in litigation — reserves probably reflect expected settlement; harder to move.

• Closed — the claim is finished from the carrier's perspective.

• Reopened — usually means new medical activity on a previously closed claim. Reopened claims often signal ongoing exposure even if the dollars look manageable.

The implication for submission: a loss run dominated by Open claims with no recent activity tells an underwriter the prior carrier didn't manage the claims aggressively. That's actually an opportunity for the new placement — the incoming carrier sees room to close out the tail and improve experience.

Frequency-severity patterns

Once you understand the data, the patterns are what matter. Underwriters look for several specific shapes.

Frequency-dominant — many small claims

Eight claims in three years, all under $10,000, all medical-only. This pattern signals systemic safety issues: minor injuries happening regularly because something about the work environment, training, or supervision isn't preventing them. Underwriters see this as predictive of more of the same. The placement is harder than the dollar totals suggest because the frequency keeps the primary-loss bucket full.

Severity-dominant — one or two large claims

One $300,000 back injury, otherwise quiet. This pattern signals bad luck more than bad practice. Underwriters generally view this more favorably than frequency — a single severe claim could happen anywhere, the rest of the loss runs suggest a generally safe operation. Placement is easier despite the larger dollar number.

Trending up

Three claims in 2022, five in 2023, eight in 2024. Even if the dollar totals are modest, the trend line predicts more claims coming. Underwriters price for the trajectory, not just the snapshot. Brokers need to address the trend explicitly in the narrative — what changed, what's being done.

Trending down

Eight claims in 2022, four in 2023, two in 2024. This is the strongest possible loss run narrative for a placement. Even if the older years pull the mod up mechanically, underwriters see the trajectory and price toward where the account is going, not where it was. A clean trending-down loss run is worth aggressive submission across all specialty markets.

The narrative loss summary

Strong specialty submissions include a one-page narrative loss summary. Underwriters routinely call this out as the single most useful document in the submission package. The narrative does what the raw loss run can't: it tells the underwriter what happened and what changed.

Structure for a useful narrative loss summary:

• Top-line summary: total claims, total incurred, current X-Mod, trend line in one sentence.

• Year-by-year breakdown: what happened, what was driving the experience, any major incidents.

• Each significant claim ($25K+) gets two sentences: what happened, current status.

• Prevention investments: what's been done since the bad year(s).

• Forward-looking statement: what's changed in the safety culture, the management team, or the operations.

The narrative isn't spin. Underwriters can tell when they're being snowed. A narrative that acknowledges the bad claim, explains it honestly, and shows what's changed performs better than one that minimizes.

Common loss-run mistakes brokers make

• Submitting stale loss runs. Anything over 90 days old gets flagged. Specialty underwriters generally won't quote without runs currently valued within the last 90 days.

• Skipping the narrative. A submission with three years of loss runs and no narrative summary tells the underwriter the broker hasn't read them either.

• Failing to address open claims with reserves. Aging open claims with reserves attached drag down placement. Either get them closed or explain why they're still open in the narrative.

• Mixing classes without noting the split. A general contractor with both 5403 (carpentry) and 5645 (excavation) payroll has two different loss patterns. Most loss runs lump them together. Underwriters want the split.

• Submitting to standard markets first. Standard markets see the loss run, decline, and the decline becomes a data point in the file. By the time the broker submits to specialty markets, the run has the standard-market declines visible. Submit to specialty first when the loss run shows elevated exposure.

When to bring in a wholesale specialist

Loss-run analysis is a core skill for any workers comp broker, but the difference between an experienced wholesale specialist and a generalist retail agent often shows up here. Specialists read patterns retail agents miss, prepare narratives that align with how the specialty market underwrites, and know which carriers will be moved by which kinds of stories. A 1.45 mod with the right narrative places at different rates than the same mod with no narrative.

CPR Business Solutions has been placing workers comp accounts since 2009. We do the loss-run analysis as part of every placement — reading the patterns, preparing the narrative, and matching the account profile to the specialty market that fits it best. The placement isn't just about access to markets; it's about presenting the account in a way that gets the right underwriter's attention.

Submit an account at proposals@cprbrokers.com or call (704) 256-5945 to talk through a specific placement.