5. REINSURANCE

In the ordinary course of business, the Company assumes and cedes premiums and selected insured risks with other insurance companies, known as reinsurance. A large portion of the reinsurance is put into effect under contracts known as treaties and, in some instances, by negotiation on each individual risk (known as facultative reinsurance). In addition, there are several types of treaties including quota share, excess of loss and catastrophe reinsurance contracts that protect against losses over stipulated amounts arising from any one occurrence or event. The arrangements allow the Company to pursue greater diversification of business and serve to limit the maximum net loss to a single event, such as a catastrophe. Through the quantification of exposed policy limits in each region and the extensive use of computer-assisted modeling techniques, management monitors the concentration of risks exposed to catastrophic events.

Through the purchase of reinsurance, the Company also generally limits its net loss on any individual risk to a maximum of $750,000, although certain treaties contain an annual aggregate deductible before reinsurance applies.

Premiums, written and earned, along with losses and settlement expenses incurred for the periods presented is summarized as follows:



	Three-Month Periods Ended June 30,
	2018		2017
WRITTEN
Direct	$	16,024,661	$	13,821,048
Reinsurance assumed		39,681		63,549
Reinsurance ceded		(2,923,738)		(1,990,713)
Net	$	13,140,604	$	11,893,884
EARNED
Direct	$	14,175,677	$	12,580,381
Reinsurance assumed		41,420		67,956
Reinsurance ceded		(2,732,026)		(1,937,579)
Net	$	11,485,071	$	10,710,758
LOSS AND SETTLEMENT EXPENSES INCURRED
Direct	$	9,051,216	$	8,583,336
Reinsurance assumed		(1,374)		20,026
Reinsurance ceded		(1,259,255)		(1,739,104)
Net	$	7,790,587	$	6,864,258



	Six-Month Periods Ended June 30,
	2018		2017
WRITTEN
Direct	$	30,412,331	$	26,409,639
Reinsurance assumed		92,487		103,385
Reinsurance ceded		(5,390,711)		(3,966,942)
Net	$	25,114,107	$	22,546,082
EARNED
Direct	$	27,662,798	$	25,373,175
Reinsurance assumed		99,164		117,174
Reinsurance ceded		(4,979,947)		(3,941,485)
Net	$	22,782,015	$	21,548,864
LOSSES AND SETTLEMENT EXPENSES INCURRED
Direct	$	18,597,156	$	16,452,838
Reinsurance assumed		34,757		62,458
Reinsurance ceded		(2,845,477)		(3,051,654)
Net	$	15,786,436	$	13,463,642