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

6 Months Ended

Jun. 30, 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).

		Six Months Ended
		June 30,
		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		84,871		78,482
Prior years		(13,189)		(7,669)
Total incurred		71,682		70,813
Amount paid, related to:
Current year		35,956		24,034
Prior years		42,108		44,419
Total paid		78,064		68,453
Net balance at end of year		120,165		132,620
Plus:  reinsurance recoverable		39,513		48,945
Balance at end of year	$	159,678	$	181,565

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 $13,189,000 in 2018 related to prior years consists of favorable developments of $8,398,000 in the Specialty Health reserves, $3,345,000 in the group disability reserves, $998,000 in the other individual life, annuities and other reserves, and $448,000 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 decreased during 2018 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 $7,669,000 in 2017 related to prior years primarily consists of favorable developments of $2,679,000 in the Medical Stop-Loss reserves, $2,793,000 in the group disability reserves, and $2,262,000 in the other individual life, annuities and other reserves, partially offset by an unfavorable development of $65,000 in Specialty Health 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
		Six Months Ended
		June 30,
		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		26,747		25,514
Prior years		(7,174)		343
Total incurred		19,573		25,857
Amount paid, related to:
Current year		7,336		2,927
Prior years		16,662		17,355
Total paid		23,998		20,282
Net balance at end of year		27,717		31,579
Plus:  reinsurance recoverable		683		666
Balance at end of year	$	28,400	$	32,245

The liability for the IBNR plus expected development on reported claims associated with the Company’s health insurance claims is $28,400,000 at June 30, 2018.