Losses and Loss Adjustment Expenses

3 Months Ended

Mar. 31, 2020

8.	Losses and Loss Adjustment Expenses

The following table provides a reconciliation of our beginning and ending unpaid loss and loss adjustment expense (“LAE”) reserve balances for the three months ended March 31, 2020 and 2019.

	2020		2019
Balance at January 1	$	63,607,975	$	68,392,333
Less: Reinsurance recoverable on liability for losses and loss adjustment expenses		7,850,409		7,956,043
Add: Reinsurance recoverable on claims paid		335,274		5,791
Net liability at January 1		56,092,840		60,442,081
Losses and loss adjustment expenses incurred, net:
Current period		3,185,603		3,321,676
Prior periods		—		—
Total incurred losses and loss adjustment expenses		3,185,603		3,321,676
Less losses and loss adjustment expenses paid, net:
Current period		57,756		79,592
Prior periods		2,801,374		5,013,009
Total losses and loss adjustment expenses paid		2,859,130		5,092,601
Net liability for losses and loss adjustment expenses, at March 31		56,419,313		58,671,156
Add: Reinsurance recoverable on liability for losses and loss adjustment expenses		8,630,126		8,207,848
Less: Reinsurance recoverable on claims paid		696,088		257,892
Liability for losses and loss adjustment expenses, at March 31	$	64,353,351	$	66,621,112

The liability for losses and LAE at March 31, 2020 and 2019 was $64,353,351 and $66,621,112, respectively. For the three months ended March 31, 2020 and 2019, $2,801,374 and $5,013,009, 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.

Positive Insurance Company uses a combination of the Actual versus Expected Method, Bornhuetter-Ferguson Method, Expected Loss Ratio Method, Frequency/Severity Method, and the Incurred Loss Development Method in order to estimate its liability for losses and LAE. There were no significant changes in the methodologies and assumptions used to develop the liabilities for losses and LAE during the three months ended March 31, 2020.