Unpaid Losses and Loss Adjustment Expenses

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Unpaid Losses and Loss Adjustment Expenses

NOTE 11 – UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

The following table provides an analysis of Crusader’s loss and loss adjustment expense reserves, including a reconciliation of the beginning and ending balance sheet liability for the periods indicated:

	Nine Months Ended September 30
	2018		2017
Reserve for unpaid losses and loss adjustment expenses at January 1 – gross of reinsurance	$	49,076,991	$	47,055,787
Less reinsurance recoverable on unpaid losses and loss adjustment expenses		8,393,550		9,520,970
Reserve for unpaid losses and loss adjustment expenses at January 1 – net of reinsurance		40,683,441		37,534,817
Incurred losses and loss adjustment expenses:
Provision for insured events of current year		15,501,620		18,046,953
Development of insured events of prior years		2,867,960		6,304,798
Total incurred losses and loss adjustment expenses		18,369,580		24,351,751
Loss and loss adjustment expense payments:
Attributable to insured events of the current year		4,781,651		4,375,729
Attributable to insured events of prior years		13,322,413		16,335,178
Total payments		18,104,064		20,710,907
Reserve for unpaid losses and loss adjustment expenses at September 30 – net of reinsurance		40,948,957		41,175,661
Reinsurance recoverable on unpaid losses and loss adjustment expenses		8,291,385		11,890,854
Reserve for unpaid losses and loss adjustment expenses at September 30 – gross of reinsurance	$	49,240,342	$	53,066,515

Some lines of insurance are commonly referred to as "long-tail" lines because of the extended time required before claims are ultimately settled. Lines of insurance in which claims are settled relatively quickly are called "short-tail" lines. It is generally more difficult to estimate loss reserves for long-tail lines because of the long period of time that elapses between the occurrence of a claim and its final disposition and the difficulty of estimating the settlement value of the claim. Crusader’s short-tail lines consist of its property coverages, and its long-tail lines consist of its liability coverages. However, Crusader’s long-tail liability claims tend to be settled relatively quicker than other long-tail lines not underwritten by Crusader, such as workers’ compensation, professional liability, umbrella liability, and medical malpractice. Since trends develop over longer periods of time on long-tail lines of business, the Company generally gives credibility to those trends more slowly than for short-tail or less volatile lines of business.