Unpaid Losses and Loss Adjustment Expenses

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Unpaid Losses and Loss Adjustment Expenses

NOTE 9 – 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:

	Three Months Ended March 31
	2020		2019
Reserve for unpaid losses and loss adjustment expenses at January 1 – gross of reinsurance	$	55,066,480	$	51,657,155
Less reinsurance recoverable on unpaid losses and loss adjustment expenses		14,725,855		9,531,602
Reserve for unpaid losses and loss adjustment expenses at January 1 – net of reinsurance		40,340,625		42,125,553
Incurred losses and loss adjustment expenses:
Provision for insured events of current year		5,161,176		4,550,888
Development of insured events of prior years		716,209		603,555
Total incurred losses and loss adjustment expenses		5,877,385		5,154,443
Loss and loss adjustment expense payments:
Attributable to insured events of the current year		1,444,009		1,158,426
Attributable to insured events of prior years		4,034,155		6,468,019
Total payments		5,478,164		7,626,445
Reserve for unpaid losses and loss adjustment expenses at March 31 – net of reinsurance		40,739,846		39,653,551
Reinsurance recoverable on unpaid losses and loss adjustment expenses		15,399,752		11,679,320
Reserve for unpaid losses and loss adjustment expenses at March 31 – gross of reinsurance	$	56,139,598	$	51,332,871

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.