POLICY LIABILITIES

3 Months Ended

Mar. 31, 2021

Changes in the liability for unpaid policy claims were as follows:


	Three Months Ended March 31,
(In millions)		2021		2020
Unpaid supplemental health claims, beginning of period		$	4,389	$	3,968
Less reinsurance recoverables		39		31
Net balance, beginning of period		4,350		3,937
Add claims incurred during the period related to:
Current year		1,859		1,837
Prior years		(320)		(136)
Total incurred		1,539		1,701
Less claims paid during the period on claims incurred during:
Current year		511		556
Prior years		1,061		1,144
Total paid		1,572		1,700
Effect of foreign exchange rate changes on unpaid claims		(162)		12
Net balance, end of period		4,155		3,950
Add reinsurance recoverables		37		33
Unpaid supplemental health claims, end of period		4,192		3,983
Unpaid life claims, end of period		756		710
Total liability for unpaid policy claims		$	4,948	$	4,693

The incurred claims development related to prior years reflects favorable claims experience compared to previous estimates. The favorable claims development of $320 million for the three-month period ended March 31, 2021 comprises approximately $101 million from Japan and $219 million from the U.S., representing approximately 32% and 68% of the total, respectively. Excluding the impact of foreign exchange of a gain of approximately $1 million from December 31, 2020 to March 31, 2021, the favorable claims development in Japan would have been approximately $100 million, representing approximately 31% of the total. The U.S. portion of the favorable claims development includes $137 million related to refinements in estimates for COVID and non-COVID claims as experience emerged.

The Company has experienced continued favorable claim trends in 2021 for its core health products in Japan. During the first quarter of 2021, there were impacts from lower utilization of healthcare services, due to the COVID-19 pandemic. This impacted both cancer and medical products, as the Japan population was avoiding doctor and hospital visits, and was staying home more. This resulted in lower sickness, accident, and cancer incurred claims. In addition, cancer treatment patterns in Japan are continuing to be influenced by significant advances in early-detection techniques and by the increased use of pathological diagnosis rather than clinical exams. Additionally, follow-up radiation and chemotherapy treatments are occurring more often on an outpatient basis. Such changes in treatment not only increase the quality of life and initial outcomes for the patients, but also decrease the average length of each hospital stay, resulting in favorable claims development.

For the majority of the Company's major U.S. accident and health lines of business, including accident, hospital indemnity, cancer, critical illness and short-term disability, the incurred claims development related to prior years reflects favorable claims experience compared to previous estimates.