Liability for Unpaid Claims

Activity in the liability for unpaid health claims is summarized as follows:



	Year Ended December 31,
	2017			2016			2015
Balance at beginning of year	$	143,128		$	137,120		$	128,265
Incurred related to:
Current year	520,528			510,075			502,009
Prior years	(8,048		)	(1,127		)	(7,845		)
Total incurred	512,480			508,948			494,164
Paid related to:
Current year	394,506			386,278			379,037
Prior years	114,237			116,662			106,272
Total paid	508,743			502,940			485,309
Balance at end of year	$	146,865		$	143,128		$	137,120

At the end of each period, the liability for unpaid health claims includes an estimate of claims incurred but not yet reported to the Company. Such estimates are updated regularly based upon the Company’s most recent claims data with recognition of emerging experience trends. Because of the nature of the Company’s health business, the payment lags are relatively short and most claims are fully paid within a year from the time incurred. Fluctuations in claims experience can lead to either over or under estimation of the liability for any given year. The difference between the estimate made at the end of the prior period and the actual experience during the period is reflected above under the caption “Incurred related to: Prior years.”

The liability for unpaid health claims is included within “Policy claims and other benefits payable” in the Consolidated Balance Sheets.

Short-Duration Contracts

Although Torchmark primarily sells long-duration contracts for both life and health, the Company also has a limited amount of group health products that qualify as short-duration contracts in accordance with the applicable guidance.

The following table illustrates the total incurred claims for short-duration products over the last five years for the year ended December 31, 2017. Claim frequency is determined by duration and incurred date.



	For the years ended December 31, 2017										As of December 31, 2017
	Cumulative incurred claims⁽¹⁾										Total of incurred-but-not-reported liabilities plus expected development on reported claims		Cumulative number of reported claims⁽¹⁾(In thousands)
Accident Year	2013		2014		2015		2016		2017
2013	$	84,111	$	82,644	$	83,151	$	83,119	$	83,103	$	—	1,337
2014			101,407		99,876		99,810		99,777		—		1,600
2015					141,667		141,460		141,259		17		2,224
2016							140,944		138,899		431		2,158
2017									134,677		24,259		1,765
							Total		$	597,715	$	24,707


(1)	The incurred claims and cumulative number of reported claims for all years prior to 2017 are unaudited.

This table illustrates the total cumulative paid claims and allocated claims for short-duration products over the last five years for the year ended December 31, 2017.



	Cumulative paid claims⁽¹⁾
	For the years ended December 31,
Accident Year	2013		2014		2015		2016		2017
2013	$	68,159	$	82,408	$	83,131	$	83,119	$	83,103
2014			81,054		99,545		99,791		99,777
2015					115,922		140,982		141,242
2016							114,720		138,468
2017									110,418
							Total		573,008
Short-duration claim liability as of December 31, 2017									24,707
			Total incurred claims & IBNR						$	597,715


(1)	The cumulative paid claims for all years prior to 2017 are unaudited.

Below is the reconciliation of the net incurred and paid claims development tables to the liability for "Policy claims and other benefits payable" in the Consolidated Balance Sheets.



	December 31, 2017		December 31, 2016
Policy claims and other benefits payable:
Short-duration products	$	24,707	$	26,721
Insurance lines other than short duration—health	122,158		116,407
Total health	146,865		143,128
Insurance lines other than short duration—life	186,429		156,437
Total policy claims and other benefits payable	$	333,294	$	299,565