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

12 Months Ended

Dec. 31, 2018

Notes

Liability for Future Policy Benefits and Unpaid Claims Disclosure

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 $19,907,000 in 2018 related

to prior years consists of favorable developments of $10,716,000 in the Specialty Health reserves, $6,332,000 in group disability reserves, $2,575,000 in the group term life, other life, annuities and other reserves, and $284,000 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) favorable development in other lines of Specialty Health business. The overall net favorable development of $8,008,000 in 2017 related to prior years consists of favorable developments of $3,742,000 in group disability reserves, $3,084,000 in the group term life, other life, annuities and other reserves, and $2,607,000 in Medical Stop-Loss reserves, partially offset by an unfavorable development of $1,425,000 in the Specialty Health reserves.

Specialty Health Segment

The following tables provide undiscounted information about net incurred and paid claims development by accident year for significant short-duration contract liabilities for policy benefits and claims in our Specialty Health segment. All amounts are shown net of reinsurance. In addition, the tables present the total IBNR plus expected development on reported claims by accident year and the cumulative number of reported claims (in thousands, except number of reported claims). Refer to Note 1 for information on the methods we use to estimate IBNR plus expected development, as well as changes to those methodologies and assumptions. Five years of claims development data is presented for lines that are included in our Specialty Health segment since a majority of the claims are fully developed in that time. Certain information about incurred and paid claims is presented as supplementary information and unaudited where indicated.

Specialty Health Segment –Claims Development
									December 31, 2018
		Incurred Claims and Claim Adjustment Expenses, Net of Reinsurance							Incurred But	Cumulative
		For the years ended December 31,							Not Reported	Number of
Accident		2014	2015	2016	2017				Plus Expected	Reported
Year		(unaudited)	(unaudited)	(unaudited)	(unaudited)		2018		Development	Claims
										(Actual)
2014	$	146,060	140,139	141,869	142,110	$	142,088	$	606	477,729
2015			104,497	100,988	101,241		100,642		1,045	470,236
2016				85,426	86,446		86,244		3,261	522,215
2017					87,070		77,214		3,547	565,213
2018							74,652		28,078	550,406
Total						$	480,840

Specialty Health Segment –Claims Development
	Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
Accident			2014	2015	2016	2017
Year			(unaudited)	(unaudited)	(unaudited)	(unaudited)		2018
2014		$	103,064	134,557	139,162	140,371	$	141,482
2015				70,090	94,757	97,603		99,364
2016					45,454	78,611		82,983
2017						49,289		73,667
2018								46,574
Total							$	444,070
Outstanding policy benefits and claims payable before 2014, net of reinsurance								258
Total policy benefits and claims, net of reinsurance							$	37,028

The claim frequency information consists of the count of claims submitted. Each claim was counted as one claim whether or not multiple claim lines were submitted with that claim, and each claim was counted whether or not it resulted in a liability.  For those portions of business that did not have claim records readily available, a reasonable count assumption was made based on a comparison to the known records of a similar business type. Cumulative claim count information is not a precise tool for calculating claim severity. Factors, such as changes in provider billing practices, the mix of services, benefit designs or processing systems could impact this type of analysis. The Company does not necessarily use the cumulative number of reported claims disclosed above in its claims analysis but has provided this information to comply with accounting standards.

The following is supplementary information about the average historical policy claims duration for the Specialty Health segment as of December 31, 2018:

Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
	Year 1	Year 2	Year 3	Year 4	Year 5
Specialty Health Segment	64.2%	29.2%	3.7%	1.3%	0.8%

The liability for policy benefits and claims associated with the Company’s health insurance lines 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 the health insurance claims that are included in our Specialty Health segment for the periods indicated (in thousands).

		Specialty Health Segment
		Health Insurance Claims
		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		47,143		54,333
Prior years		(9,000)		158
Total incurred		38,143		54,491
Amount paid, related to:
Current year		24,422		24,370
Prior years		20,646		23,983
Total paid		45,068		48,353
Net balance at end of year		25,217		32,142
Plus:  reinsurance recoverable		851		762
Balance at end of year	$	26,068	$	32,904

The liability for the IBNR plus expected development on reported claims associated with the Company’s health insurance claims was $25,217,000 at December 31, 2018.

The incurred claims and claim adjustment expenses, net, for the 2013 accident year include the acquisition of $15,384,000 of disability policy benefits and claims liabilities from a Receivership.

Claim frequency information consists of the count of unique claims where a benefit has been paid, whether that benefit was paid for one month or multiple months.  Any claims where a benefit has not been paid are not in the count. Cumulative claim count information is not a precise tool for calculating claim severity. Changes in reinsurance and other factors, such as those described in Note 1, could impact this type of analysis with regards to our group disability business. The Company does not necessarily use the cumulative number of reported claims disclosed above in its claims analysis but has provided this information to comply with accounting standards.

Unpaid claim liabilities related to our group disability policies is presented at present value. The following is additional information on unpaid claims liabilities presented at present value (in thousands):

		Carrying Value of				Aggregate Amount
		Unpaid Claim Liabilities				of Discount
		December 31,				December 31
		2018		2017		2018		2017
Group disability	$	57,510	$	60,724	$	10,764	$	11,707

Discount rates for each of the years ended December 31, 2018 and 2017 ranged from 3% to 6%. Insurance benefits, claims and reserves on the Consolidated Statements of Income for the years ended December 31, 2018 and 2017 include the accretion of interest amounting to $1,617,000 and $1,706,000, respectively. 

The following is supplementary information about the average historical claims duration for our group disability business as of December 31, 2018:

Group Disability
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited)
Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9
17.5%	22.4%	7.0%	3.2%	2.2%	2.1%	1.1%	0.7%	0.4%

The following table reconciles the above disclosures of undiscounted net incurred and paid claims development for significant short-duration contract liabilities to the liability for policy benefits and claims on the consolidated balance sheet (in thousands).

		December 31, 2018
Net outstanding balances:
Specialty Health Segment	$	37,028
DBL/PFL		20,361
Group disability		68,274
Other short-duration insurance lines		6,986
Policy benefits and claims, net of reinsurance		132,649
Reinsurance recoverable on unpaid claims:
Specialty Health Segment		1,335
DBL/PFL		719
Group disability		24,712
Other short-duration insurance lines		4,768
Reinsurance recoverable on unpaid claims		31,534
Insurance lines other than short-duration		6,696
Aggregate discount		(10,764)
Total policy benefit and claims	$	160,115