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

3 Months Ended

Mar. 31, 2018

Notes

Liability for Future Policy Benefits and Unpaid Claims Disclosure

Note 9.Policy Benefits and Claims 

Policy benefits and claims is the liability for unpaid loss and loss adjustment expenses. It is comprised of unpaid claims and estimated IBNR reserves. Summarized below are the changes in the total liability for policy benefits and claims for the periods indicated (in thousands).

		Three Months Ended
		March 31,
		2018		2017
Balance at beginning of year	$	168,683	$	219,113
Less: reinsurance recoverable		42,136		88,853
Net balance at beginning of year		126,547		130,260
Amount incurred, related to:
Current year		42,761		38,882
Prior years		(5,659)		(5,756)
Total incurred		37,102		33,126
Amount paid, related to:
Current year		10,527		7,258
Prior years		26,690		30,081
Total paid		37,217		37,339
Net balance at end of year		126,432		126,047
Plus:  reinsurance recoverable		39,491		56,245
Balance at end of year	$	165,923	$	182,292

Since unpaid loss and loss adjustment expenses are estimates, actual losses incurred may be more or less than the Company’s previously developed estimates and is referred to as either unfavorable or favorable development, respectively. The overall net favorable development of $5,659,000 in 2018 related to prior years consists of favorable developments of $3,778,000 in the Specialty Health reserves, $1,612,000 in the group disability reserves and $112,000 in the other individual life, annuities and other reserves, and $157,000 in Medical Stop-Loss reserves. Specialty Health had net favorable development primarily from: (i) the release of reserves due to emerging favorable experience on hospital indemnity plan business written in 2017 on increased sales volume of this product; (ii) short term medical business as inventory levels came down this past quarter and paid claim activity was below the levels anticipated; and, (iii) the reinsured international line in run out, which experienced favorable development during the quarter as reported by the carrier. The overall net favorable development of $5,756,000 in 2017 related to prior years primarily consists of favorable developments of $1,636,000 in the Specialty Health reserves, $2,896,000 in the group disability reserves, and $2,048,000 in the other individual life, annuities and other reserves, partially offset by an unfavorable development of $824,000 in Medical Stop-Loss reserves.

Included in the preceding rollforward of the Company’s liability for policy benefits and claims are the policy benefits and claims activity associated with the Company’s health insurance lines. These are embedded within the Specialty Health segment. The table below summarizes the components of the change in the liability for policy benefits and claims that are specific to health insurance claims for the periods indicated (in thousands).

		Specialty Health Segment
		Health Insurance Claims
		Three Months Ended
		March 31,
		2018		2017
Balance at beginning of year	$	32,904	$	27,183
Less: reinsurance recoverable		762		1,179
Net balance at beginning of year		32,142		26,004
Amount incurred, related to:
Current year		14,472		11,776
Prior years		(2,584)		(1,200)
Total incurred		11,888		10,576
Amount paid, related to:
Current year		1,420		153
Prior years		10,170		10,338
Total paid		11,590		10,491
Net balance at end of year		32,440		26,089
Plus:  reinsurance recoverable		698		427
Balance at end of year	$	33,138	$	26,516

The liability for the IBNR plus expected development on reported claims associated with the Company’s health insurance claims is $32,440,000 at March 31, 2018.