Guide: new ventures
Loss runs for a new venture with no history: what to give an underwriter instead
A new venture has no claims history, so there may be no loss run to provide. Underwriters then rely on other evidence: a statement of no known losses, the experience of the owners and any predecessor business, and a clear description of operations and exposures.
General information, not advice. This is not insurance, legal or financial advice. Requirements differ by carrier, state and market; follow the instructions of the market you are approaching.
What counts as new
Four cases, and one rule for all of them
Four cases come up: a new entity with new owners, a new entity whose owners ran a similar business before, the purchase or continuation of an existing business, and an existing business adding a new operation. Which history a market wants differs in each, so ask.
The rule for all four is to describe the business as it is. If the operations, owners or name continue from an earlier business, say so. When a business has under five years of history, the market will usually want everything since inception. See five years of loss runs.
Steps
What to assemble when there is nothing to run
With no claims to read, the other documents carry the submission.
- Pin down what 'new' meansRecord the dates of formation and first operations, and any predecessor, affiliate or acquired business.
- Get a loss run for any period already insuredA short report for the first few months is still a loss run, and one that prints no claims still counts.
- Collect the prior history that appliesLoss runs from a predecessor, a seller or the owners' earlier business, where the market asks and the owners can obtain them.
- Prepare a no-loss statementIf the market accepts one, the insured signs a statement of no known losses, on the market's form or wording.
- Describe operations and exposuresPayroll by class, revenue, vehicles and drivers, locations, subcontracting and contracts, projected for the first term.
- Document experience and controlsYears in the trade, licenses, training and safety procedures, with a document behind each point.
Reference
What you have, and what to offer in place of a loss run
| What you have | What to offer instead | Note |
|---|---|---|
| Brand-new entity, new owners | A no-loss statement, an operations and exposure summary, and the owners' experience | The market decides what else it needs |
| New entity, experienced owners | Loss runs from the owners' earlier business, if the market asks and they can obtain them | Needs the right authority, and may be older |
| Bought or continuing an existing business | The seller's or predecessor's loss runs for those operations | Availability depends on the seller |
| Re-formed or renamed | The earlier entity's loss runs | A market may look through to the same operations |
| Insured for a few months already | A loss run for the period so far, currently valued | A report with no claims is still a loss run |
| Existing business adding a new line | Loss runs for the other lines, plus exposures for the new one | State clearly what is new |
Pitfalls
What goes wrong
- Calling a continuing business new. If the operations, owners or name carry over, presenting it as new misstates the risk.
- A no-loss statement nobody checked. The insured should read it and be able to support what it signs.
- Vague exposures. With no claims to read, payroll, revenue and vehicle figures carry the submission.
- Expecting a mod. A new employer generally has no experience modification until the bureau's rules make it eligible. The bureau decides, so ask.
- No plan for the first renewal. The first full loss run is what the next market reads, so request it on time.
The tool
How LossRun Pro helps
A new venture has no claims table to convert, so LossRun Pro has nothing to read until a carrier issues its first report. When one does, a period printed as "no claims" is listed as a zero-claim period, and tied to zero when the report prints a zero total. A predecessor's or an owner's loss runs can be uploaded like any other, and each upload joins the same schedule. Try it on the loss run to Excel page. Free: 1 file per day, up to 10 pages, no account. Files over 10 pages are converted up to page 10 on the free allowance; a page code converts the whole file, up to 150 pages. See pricing.
FAQ
Questions about new ventures and loss runs
Does a new business need loss runs?
If it has been insured and operating, ask the carrier for a loss run for that period, even if it shows no claims. If it has not, none exists, and the submission relies on other evidence.
What is a no-loss statement?
A signed statement by the insured that it knows of no losses or incidents for the period. Markets that accept one usually have their own wording, so ask for it. The insured should sign only what it can support.
Will the underwriter ask about the owners' earlier businesses?
Some do, mainly when the owners ran a similar operation. Whether to provide it, and how far back, is for the market to say, so ask early.
What about workers' compensation and the experience mod?
A new employer typically has no experience modification until the bureau's rules make it eligible, so it is rated without one at first. Rules differ by state. See workers' comp loss runs and the experience mod.
How long until the venture has a loss history?
After its first policy term, the carrier's loss run is the first record. Request it in time for the first renewal, valued within the market's window. See currently valued loss runs.
Can I use another business's loss runs?
Only if they belong to a predecessor or to the owners' earlier operations, and only with authority from whoever is entitled to them. Never present them as the new business's own.