What can be inferred about the relationship between a loss run report and an insurer's premium decisions?

A loss run report is a key tool utilized by insurers to assess a policyholder's claims history over a specific period. This report compiles data on past claims, including the frequency and severity of losses, which provides vital insights into an insured's risk profile.

The correct conclusion about the relationship between a loss run report and an insurer's premium decisions is that it helps identify high-risk customers. Insurers typically analyze this report to determine how often a policyholder has made claims and the costs associated with those claims. If the claims history reveals a pattern of frequent or severe losses, it may indicate that the individual or business is a higher risk. This assessment can lead to higher premiums or even the denial of coverage, as insurers aim to mitigate potential losses.

By understanding a policyholder’s claims history through the loss run report, insurers can make informed decisions on how to price their policies, ensuring that their premiums reflect the level of risk associated with covering that policyholder. Thus, the connection between the report and premium decisions is significant, as it directly impacts risk assessment and the pricing strategy employed by insurers.