Note 9. Policy Benefits and Claims

12 Months Ended

Dec. 31, 2015

Notes

Note 9. Policy Benefits and Claims

 Note 9.                        Policy Benefits and Claims

Summarized below are the changes in the liability for policy benefits and claims for the periods indicated (in thousands).

		2015		2014		2013
Balance at beginning of year	$	236,803	$	237,754	$	194,480
Less: reinsurance recoverable		78,531		72,772		78,629
Net balance at beginning of year		158,272		164,982		115,851
Amount assumed		10,343		-		15,384
Amount incurred, related to:
Current year		294,390		303,973		324,040
Prior years		(8,488)		(4,552)		(3,230)
Total incurred		285,902		299,421		320,810
Amount paid, related to:
Current year		169,488		192,001		207,315
Prior years		104,948		114,130		79,748
Total paid		274,436		306,131		287,063
Net balance at end of year		180,081		158,272		164,982
Plus:  reinsurance recoverable		65,362		78,531		72,772
Balance at end of year	$	245,443	$	236,803	$	237,754

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 overall net favorable development of $8,488,000 in 2015 related to prior years consists of favorable developments of $7,977,000 in the Fully Insured Health reserves and $4,464,000 in the group disability reserves, partially offset by an unfavorable development of $3,628,000 in Medical Stop-Loss reserves and $325,000 in other individual accident and health reserves. The overall net favorable development of $4,552,000 in 2014 related to prior years consists of favorable developments of $3,830,000 in the group disability reserves, $448,000 in other individual accident and health reserves and $378,000 in the Fully Insured Health reserves partially offset by an unfavorable development of $104,000 in Medical Stop-Loss reserves. The overall net favorable development of $3,230,000 in 2013 related to prior years consists of favorable developments of $4,269,000 in the group disability reserves and $1,069,000 in other individual accident and health reserves partially offset by an unfavorable developments of $2,000,000 in Medical Stop-Loss reserves and $108,000 in the Fully Insured Health 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.