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 $1,000,000 for casualty business, $500,000 for property, and $500,000 for workers compensation, 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 March 31,
	2019		2018
WRITTEN
Direct	$	15,258,703	$	14,387,670
Reinsurance assumed		45,135		52,806
Reinsurance ceded		(2,835,043)		(2,466,973)
Net	$	12,468,795	$	11,973,502
EARNED
Direct	$	15,237,955	$	13,487,121
Reinsurance assumed		55,375		57,745
Reinsurance ceded		(2,847,416)		(2,247,922)
Net	$	12,445,914	$	11,296,944
LOSS AND SETTLEMENT EXPENSES INCURRED
Direct	$	14,716,353	$	9,545,940
Reinsurance assumed		46,306		36,131
Reinsurance ceded		(5,155,369)		(1,586,222)
Net	$	9,607,290	$	7,995,849