POLICY LIABILITIES

6 Months Ended

Jun. 30, 2021

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


	Three Months Ended June 30,					Six Months Ended June 30,
(In millions)		2021		2020			2021		2020
Unpaid supplemental health claims, beginning of period		$	4,192	$	3,983		$	4,389	$	3,968
Less reinsurance recoverables		37		33			39		31
Net balance, beginning of period		4,155		3,950			4,350		3,937
Add claims incurred during the period related to:
Current year		1,710		1,736			3,570		3,574
Prior years		(198)		(166)			(518)		(302)
Total incurred		1,512		1,570			3,052		3,272
Less claims paid during the period on claims incurred during:
Current year		1,139		1,127			1,657		1,681
Prior years		407		411			1,461		1,558
Total paid		1,546		1,538			3,118		3,239
Effect of foreign exchange rate changes on unpaid claims		4		22			(159)		34
Net balance, end of period		4,125		4,004			4,125		4,004
Add reinsurance recoverables		37		37			37		37
Unpaid supplemental health claims, end of period		4,162		4,041			4,162		4,041
Unpaid life claims, end of period		759		732			759		732
Total liability for unpaid policy claims		$	4,921	$	4,773		$	4,921	$	4,773

The incurred claims development related to prior years reflects favorable claims experience compared to previous estimates. The favorable claims development of $518 million for the six-month period ended June 30, 2021 comprises approximately $220 million from Japan and $298 million from the U.S., representing approximately 42% and 58% of the total, respectively. Excluding the impact of foreign exchange of a loss of approximately $5 million from December 31, 2020 to June 30, 2021, the favorable claims development in Japan would have been approximately $225 million, representing approximately 43% of the total.

The Company has experienced continued favorable claim trends in 2021 for its core health products in Japan. During the first six months 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. The U.S. portion of the favorable claims development includes $125 million related to refinements in estimates for COVID and non-COVID claims as experience emerged.