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 September 30,
	2018		2017
WRITTEN
Direct	$	16,170,176	$	14,117,001
Reinsurance assumed		16,199		114,391
Reinsurance ceded		(2,988,813)		(2,051,977)
Net	$	13,197,562	$	12,179,415
EARNED
Direct	$	15,088,986	$	13,131,193
Reinsurance assumed		17,500		111,311
Reinsurance ceded		(2,968,796)		(2,051,056)
Net	$	12,137,690	$	11,191,448
LOSS AND SETTLEMENT EXPENSES INCURRED
Direct	$	10,513,847	$	11,132,969
Reinsurance assumed		36,653		21,356
Reinsurance ceded		(1,938,927)		(3,090,924)
Net	$	8,611,573	$	8,063,401



	Nine-Month Periods Ended September 30,
	2018		2017
WRITTEN
Direct	$	46,582,507	$	40,526,640
Reinsurance assumed		108,686		217,776
Reinsurance ceded		(8,379,524)		(6,018,919)
Net	$	38,311,669	$	34,725,497
EARNED
Direct	$	42,751,784	$	38,504,368
Reinsurance assumed		116,663		228,486
Reinsurance ceded		(7,948,742)		(5,992,542)
Net	$	34,919,705	$	32,740,312
LOSSES AND SETTLEMENT EXPENSES INCURRED
Direct	$	29,111,003	$	27,585,807
Reinsurance assumed		71,410		83,814
Reinsurance ceded		(4,784,404)		(6,142,578)
Net	$	24,398,009	$	21,527,043