Note 13 Insurance Policy Claims and Reserves

12 Months Ended

Dec. 31, 2011

Financial Services, Insurance

Liability for Future Policy Benefits and Unpaid Claims Disclosure [Text Block]

Note 13.          Insurance Policy Claims and Reserves

The liabilities for unpaid claims and claim adjustment expenses and insurance reserves-health represent amounts necessary to provide for the estimated cost of settling claims relating to insured events that have been incurred prior to the balance sheet date which have not yet been settled. 

Changes in the liability for reserves, unpaid claims and claim adjustment expenses for the Insurance Group's health and disability coverages for the years ended December 31, 2011, 2010 and 2009 are summarized below.

				2011		2010		2009
				(In thousands)
Balance at beginning of year			$	197,968	$	202,801	$	211,318
Less: reinsurance recoverable				82,724		100,711		104,076
Net balance at beginning of year				115,244		102,090		107,242
Gross reserves of AMIC acquired				-		27,373		-
Less: reinsurance recoverable				-		10,296		-
Net reserves of AMIC acquired				-		17,077		-
Amount incurred:
	Current year			197,705		203,602		180,015
	Prior years			(7,492)		(2,466)		250
		Total		190,213		201,136		180,265
Amount paid, related to:
	Current year			123,702		137,953		108,438
	Prior years			71,905		67,106		76,979
		Total		195,607		205,059		185,417
Net balance at end of year				109,850		115,244		102,090
Plus:  reinsurance recoverable				83,137		82,724		100,711
Balance at end of year			$	192,987	$	197,968	$	202,801

The preceding schedule reflects:  (i) the due and unpaid; (ii) claims in the course of settlement; (iii) estimated incurred but not reported reserves; and (iv) the present value of amounts not yet due on claims. The incurred and paid data above reflects all activity for the year. The net favorable development in 2011 for prior years of $7,492,000 is primarily the result of $2,622,000 of net favorable developments in Medical Stop-Loss reserves, $2,276,000 in the Fully Insured reserves, $2,397,000 in the group disability reserves and $197,000 in all other reserves.  The net favorable development in 2010 for prior years of $2,466,000 is primarily the result of favorable development of $4,299,000 in the group disability reserves offset by $1,258,000 incurred in Medical Stop-Loss reserves and $575,000 incurred on all other reserves. The amount incurred in 2009 for prior years of $250,000 is primarily the result of $2,586,000 of Medical Stop-Loss reserves and favorable development of $1,905,000 in the group disability reserves and $431,000 on all other reserves.

These changes in reserve estimates are generally the result of on-going analysis of recent loss development trends.  Medical stop-loss business is excess coverage with a short duration. Predicting ultimate claims and estimating reserves in medical stop-loss is especially complicated due to the “excess of loss” nature of these products with very high deductibles applying to specific claims on any individual claimant and in the aggregate for a given group. Fluctuations in results for specific coverage are primarily due to the severity and frequency of individual claims. Due to the short-term nature of medical stop-loss, redundancies and deficiencies will typically emerge during the following year rather than over a number of years.