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

3 Months Ended

Mar. 31, 2019

Notes

Liability for Future Policy Benefits and Unpaid Claims Disclosure

Note 11.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 incurred but not reported (“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,
		2019		2018
Balance at beginning of year	$	160,115	$	168,683
Less: reinsurance recoverable		38,122		42,136
Net balance at beginning of year		121,993		126,547
Amount incurred, related to:
Current year		46,775		42,761
Prior years		(3,000)		(5,659)
Total incurred		43,775		37,102
Amount paid, related to:
Current year		12,658		10,527
Prior years		26,080		26,690
Total paid		38,738		37,217
Net balance at end of year		127,030		126,432
Plus:  reinsurance recoverable		37,880		39,491
Balance at end of year	$	164,910	$	165,923

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 $3,000,000 in 2019 related to prior years consists of favorable developments of $1,510,000 in Specialty Health reserves, $1,369,000 in the group disability reserves, $113,000 in the other individual life, annuities and other reserves, and $8,000 in Medical Stop-Loss reserves.  Specialty Health net favorable development occurred primarily in the group gap, dental, pets, fixed indemnity limited benefit and occupational accident lines of business.  Group Disability net favorable development was primarily due to favorable claim experience in the DBL line of business.  The overall net favorable development of $5,659,000 in 2018 related to prior years primarily 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.

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,
		2019		2018
Balance at beginning of year	$	26,068	$	32,904
Less: reinsurance recoverable		851		762
Net balance at beginning of year		25,217		32,142
Amount incurred, related to:
Current year		13,416		14,472
Prior years		(930)		(2,584)
Total incurred		12,486		11,888
Amount paid, related to:
Current year		1,695		1,420
Prior years		8,398		10,170
Total paid		10,093		11,590
Net balance at end of year		27,610		32,440
Plus:  reinsurance recoverable		499		698
Balance at end of year	$	28,109	$	33,138

The liability for the IBNR plus expected development on reported claims associated with the Company’s health insurance claims is $27,610,000 at March 31, 2019.