The following table provides a reconciliation of our beginning and ending unpaid loss and loss adjustment expense (“LAE”) reserve balances for the nine months ended September 30, 2019 and 2018.

	2019			2018
Balance at January 1	$	68,392,333		$	68,374,554
Less: Reinsurance recoverable on liability for losses and loss adjustment expenses		7,956,043			8,585,851
Add: Reinsurance recoverable on claims paid		5,791			1,196,573
Net liability at January 1		60,442,081			60,985,276
Losses and loss adjustment expenses incurred, net:
Current period		11,731,068			1,980,286
Prior periods		(20,896	)		9,772,000
Total incurred losses and loss adjustment expenses		11,710,172			11,752,286
Less losses and loss adjustment expenses paid, net:
Current period		203,693			437,000
Prior periods		14,144,675			12,921,119
Total losses and loss adjustment expenses paid		14,348,368			13,358,119
Net liability for losses and loss adjustment expenses, at September 30		57,803,885			59,379,443
Add: Reinsurance recoverable on liability for losses and loss adjustment expenses		8,930,866			8,361,014
Less: Reinsurance recoverable on claims paid		780,817			102,045
Liability for losses and loss adjustment expenses, at September 30	$	65,953,934		$	67,638,412

The liability for losses and LAE at September 30, 2019 and 2018 was $65,953,934 and $67,638,412, respectively. For the nine months ended September 30, 2019 and 2018, $14,144,675 and $12,921,119, respectively, has been paid for incurred claims attributable to insured events of prior years. Original estimates are increased or decreased, as additional information becomes known regarding individual claims. The Company recorded modest favorable development on its prior period reserves for the nine months ended September 30, 2019, and during the nine months ended September 30, 2018, the Company experienced unfavorable development of $9,772,000 primarily related to significant reserve strengthening in the 2014 and 2015 accident years for both claims-made and occurrence policies. This increase was due to a greater amount of incurred losses and LAE than originally estimated.

Positive Insurance Company uses a combination of the Actual versus Expected Method, Bornhuetter-Ferguson Method, Expected Loss Ratio Method, Frequency/Severity Method, and the Loss Development Method in order to estimate its liability for losses and LAE. Beginning in the third quarter of 2019, the Company changed its approach by aggregating its data, previously under PPIX, PCA, and PIPE, and performing a single loss reserve analysis, as opposed to three separate loss reserve analyses. The Company also used development patterns strictly based on former PPIX experience. Management does not believe that the effects of these changes had a material impact on the Company’s estimates. There were no other significant changes in the methodologies and assumptions used to develop the liabilities for losses and LAE during the nine months ended September 30, 2019.