Your claims history follows you in insurance the way your credit score follows you in lending. A clean record opens doors to competitive pricing. A history of frequent or severe losses — even losses that were not your fault — can shrink your market to a handful of carriers and push your premium into a range that strains your operating budget.
The mechanism is more transparent than most business owners realize. Underwriters pull your loss runs, calculate your experience modification factor, and make pricing decisions based on patterns they can explain and defend. This guide walks through how claims history actually affects your premium, what documents you should be tracking, and the practical steps that improve your position at renewal time.
Loss Runs: The Document Underwriters Start With
A loss run is a report generated by your current insurance carrier that lists every claim — or claim inquiry — on your policy for the past three to five years. It shows the claim date, the type of loss, amounts paid, amounts reserved (money set aside to pay future costs on an open claim), and the total incurred (paid plus reserved).
When you apply for new coverage or renew an existing policy, every underwriter you submit to will request your loss runs. Most commercial lines underwriters want five years of history. Workers' compensation underwriters may request three years for the experience modification calculation. If you cannot produce loss runs quickly, your application stalls — and that alone signals to an underwriter that you may not be managing your risk information carefully.
How to request your own loss runs
You have the right to request loss runs from your current carrier at any time. Contact your broker or the carrier's policyholder services department and request "current loss runs with values as of today." Most carriers can produce them within a few business days. Specialty markets and smaller carriers may take longer.
Request loss runs 60 to 90 days before your renewal. That gives you time to review them for accuracy before your broker submits them to markets. Errors happen — a claim that was closed and fully recovered from the at-fault party sometimes still shows as an open reserve, inflating your incurred totals. You can dispute inaccurate entries with documentation.
Pull your own loss runs every year, not just at renewal. If a claim was closed in the prior year and the reserve was not properly reduced to zero, it will inflate your incurred totals — and every underwriter will see that inflated number. Catching it before it affects your renewal pricing gives you time to get it corrected.
The Experience Modification Factor (Workers Comp)
For workers' compensation specifically, your claims history is quantified into a single number: the experience modification factor, or "ex-mod." Texas uses the National Council on Compensation Insurance (NCCI) to calculate ex-mods for employers who meet the minimum premium threshold to be "experience-rated."
An ex-mod of 1.00 is baseline — you pay the manual rate for your classification. A mod of 0.85 means you pay 85% of the manual rate. A mod of 1.25 means you pay 125% of the manual rate. The swing from a good mod to a bad one can be 30% to 50% of your workers' comp premium, which on a large contracting account can be tens of thousands of dollars per year.
How the mod is calculated
The NCCI ex-mod formula compares your actual losses to your expected losses — what a business of your size and class code would statistically experience. Two factors make the formula more nuanced than a simple loss ratio:
- Primary vs. excess losses: The formula weights "primary" losses (roughly the first $17,500 of each claim) more heavily than excess losses (amounts above that threshold). This means frequency of claims hurts your mod more than a single large claim. Three $15,000 claims will damage your mod more than one $45,000 claim.
- Three-year window: The mod uses three years of data, excluding the most recent policy year (so for a 2026 renewal, the mod reflects 2022, 2023, and 2024 policy years). You are always working on a three-year lag.
The practical implication: small, frequent claims are expensive twice. Once in direct claim costs. Again through a degraded mod that raises your premium for years afterward. A $3,000 first-aid claim that your crew files on Monday will affect your premium until the 2028 or 2029 renewal season.
When does a claim drop off the mod?
A policy year exits the mod calculation when it falls outside the rolling three-year window. If you had a bad claims year in 2022, that policy year drops out when your 2026 mod is computed (assuming a January renewal). The premium relief can be significant — but only if the subsequent years have been cleaner.
| Renewal Year | Policy Years in Mod Window | Policy Year That Drops Off |
|---|---|---|
| 2026 | 2022, 2023, 2024 | 2025 (too recent to include) |
| 2027 | 2023, 2024, 2025 | 2022 exits the window |
| 2028 | 2024, 2025, 2026 | 2023 exits the window |
How GL and Commercial Auto Underwriters Assess Loss History
General liability and commercial auto do not use a formula like the workers' comp ex-mod. Underwriters review loss runs qualitatively — looking at claim frequency, severity, cause patterns, and whether losses suggest systemic safety problems or isolated events.
What underwriters are looking for
- Frequency: Multiple claims in a single year, especially of the same type, suggest a recurring hazard rather than bad luck. Three slip-and-fall claims in the parking lot reads as a premises maintenance problem. Two auto liability claims from the same driver reads as a driver management problem.
- Severity: A single large loss — $500,000 property damage from a job site fire — will be explained and evaluated on its merits, especially with no prior history. Large losses without a pattern may still result in higher pricing, but they are generally survivable.
- Open reserves: Claims with large open reserves get more scrutiny than closed claims. A $250,000 open reserve on a GL claim means the underwriter does not know the final cost yet, and they will price for the uncertainty.
- Trend: Losses trending upward year-over-year is a red flag. Losses declining year-over-year — even with prior adverse history — signals that the business is managing risk actively.
Write a loss narrative for any significant claims. A one-page memo explaining what happened, what you did to prevent recurrence, and the current claim status gives underwriters context they cannot get from a loss run alone. Underwriters are more comfortable with a bad loss they understand than a medium loss with no explanation.
The 3-Year vs. 5-Year Window in Practice
For most commercial lines (GL, property, commercial auto), underwriters request five years of loss history. They are primarily focused on the most recent three years when pricing, but a pattern in years four and five can inform how they interpret more recent data.
If you had two bad claims years from 2019 to 2021 but clean performance since then, your broker should proactively address the older claims in the submission narrative — explaining that the losses were tied to a specific project, an employee who has since left, or a hazard that has been mitigated. Do not let stale loss history speak for itself.
What "Incurred" Means and Why It Matters More Than "Paid"
Loss runs show two cost figures: paid amounts and incurred amounts. Paid is cash already disbursed — medical bills, attorney fees, settlements. Incurred is paid plus the open reserve — the carrier's estimate of what the claim will ultimately cost when fully resolved.
Underwriters use incurred, not paid. A claim with $12,000 paid but a $180,000 reserve is a $192,000 incurred claim from an underwriting standpoint — even if the reserve ultimately never gets paid because the plaintiff accepts a lower settlement. If you are approaching renewal with large open reserves, ask your broker to request reserve reviews from the carrier. Carriers can and do reduce reserves when medical treatment is complete, litigation is resolved, or the facts support a lower estimate.
How Claims History Affects Market Access
Beyond premium pricing, claims history affects which carriers will write your account at all. Standard admitted carriers have loss ratio thresholds that trigger automatic declination regardless of other factors.
A general rule of thumb: a loss ratio above 60-65% over three years will push you from admitted markets into the excess and surplus (E&S) market. E&S carriers have more flexibility to underwrite impaired accounts, but they charge more for it. Moving from admitted to E&S can add 20-50% to your premium. Moving back to admitted after an adverse claims period takes two to three years of clean performance.
| Loss Ratio Range | Typical Market Placement | Premium Impact |
|---|---|---|
| Under 50% | Admitted standard markets | Credits likely; favorable pricing |
| 50-65% | Admitted standard; may need explanation for outlier years | Neutral to modest surcharge |
| 65-80% | Borderline admitted / E&S depending on carrier appetite | Moderate surcharge; fewer options |
| Above 80% | E&S required; some carriers decline entirely | Significant surcharge; restricted terms |
Practical Steps to Manage Your Claims History
Report claims promptly
Late-reported claims often have worse outcomes than promptly reported ones. Carriers have more options when they can intervene early: direct injured employees to network providers, assign defense counsel before facts become disputed, and manage medical treatment from the start. A claim reported 90 days after the incident typically costs more than the same claim reported within 72 hours.
That said, "report everything immediately" is not the same as "file a claim for everything." For minor incidents where the cost is well below your deductible, the incident goes on your loss run as a "claim" even if zero dollars are paid. Frequency of reported claims, including zero-dollar claims, affects underwriter perception. Consult your broker before filing any claim on a borderline incident.
Implement and document your safety program
Carriers reward demonstrable safety programs — written policies, documented training records, toolbox talk logs for contractors, vehicle inspection logs for trucking accounts. These do not eliminate claims, but they influence how underwriters evaluate cause patterns on your loss runs. A slip-and-fall on a site where you can demonstrate active hazard mitigation reads differently than the same claim on a site with no safety documentation.
Return-to-work programs reduce workers comp costs
On workers' comp claims, the single highest-cost line item is wage replacement — the indemnity payment to an injured employee who cannot work. A return-to-work program that offers modified-duty positions shortens the indemnity period and reduces claim costs. For a claim that might otherwise generate 90 days of lost wages, a modified-duty program that gets the employee back in 30 days cuts the indemnity cost by two-thirds. Claim cost reduction flows directly into your mod calculation in subsequent years.
Contest reserves that are too high
Workers' comp and GL claims can sit with inflated reserves for extended periods — particularly when litigation is in progress and the carrier is holding reserves at worst-case scenario levels. Ask your broker to request reserve reviews on open claims where you believe the reserve exceeds a realistic settlement value. Getting a reserve reduced from $300,000 to $150,000 on an open claim can meaningfully improve your mod at the next calculation.
What to Ask Your Broker
- Can you pull and review my current loss runs before submitting to markets? Your broker should be reviewing loss runs for accuracy — not just passing them through to underwriters.
- Am I experience-rated for workers comp, and what is my current mod? If you meet the minimum premium threshold, your mod is filed with NCCI and your broker should know it.
- For any claims from the past two years, are the reserves appropriately set? Your broker can advocate with the carrier for reserve reviews on open claims.
- Is there anything on my loss runs that will create a problem at renewal? Your broker should identify issues 90 days out — not when you are getting non-renewal notices.
- What market am I likely in — admitted or E&S — given my current history? If you are heading toward E&S, knowing it early gives you time to prepare and consider whether proactive narrative can hold admitted markets.
Frequently Asked Questions
Does a claim that was denied affect my loss runs?
Yes. A claim that was opened and investigated — even if ultimately denied with zero payment — typically appears on your loss run. The incurred amount may show as zero or a small expense reserve for the investigation cost. Frequency of opened claims, regardless of outcome, is visible to underwriters.
How long do claims stay on my loss runs?
Standard loss runs go back five years. Closed claims from more than five years ago typically will not appear unless you request older history. However, if a claim from seven years ago is still generating payments — a long-tail liability claim or a permanently disabled workers' comp claimant — it may still show as open on more recent loss runs.
Can I switch carriers to get away from bad claims history?
No. New carriers will request loss runs from your prior carriers as part of the application. Carriers are required to provide loss runs within a specified timeframe under Texas Insurance Code. There is no way to hide prior claims history from a new underwriter in the normal market.
My ex-mod went from 1.0 to 1.35 in one year. How long will this affect my premium?
A mod calculated today reflects the prior three policy years (excluding the most recent). A bad year enters the calculation and stays for three years before it exits. If your 2024 policy year was the problem year, it will affect your 2026, 2027, and 2028 mods. In 2029, it exits the calculation — assuming 2025 and subsequent years are cleaner.
For a deeper look at how all these insurance building blocks fit together, see our general liability insurance guide. If you are a contractor managing subcontractor compliance alongside your own claims, our subcontractor insurance requirements guide covers how your subs' claims history can affect your master account.