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

6 Months Ended

Jun. 30, 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).

		Six Months Ended
		June 30,
		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		96,736		84,871
Prior years		(8,141)		(13,189)
Total incurred		88,595		71,682
Amount paid, related to:
Current year		41,644		35,956
Prior years		37,242		42,108
Total paid		78,886		78,064
Net balance at end of year		131,702		120,165
Plus:  reinsurance recoverable		37,282		39,513
Balance at end of year	$	168,984	$	159,678

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 $8,141,000 in 2019 related to prior years consists of favorable developments of $3,158,000 in Specialty Health reserves, $4,230,000 in the group disability reserves, $594,000 in the other individual life, annuities and other reserves, and $159,000 in Medical Stop-Loss reserves.  Specialty Health net favorable development occurred primarily in the pets, fixed indemnity limited benefit, short-term medical and occupational accident lines of business.  Group Disability net favorable development was primarily due to favorable claim experience in the DBL and LTD lines of business.  The overall net favorable development of $13,189,000 in 2018 related to prior years primarily 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.

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,
		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		25,855		26,747
Prior years		(1,622)		(7,174)
Total incurred		24,233		19,573
Amount paid, related to:
Current year		7,838		7,336
Prior years		13,157		16,662
Total paid		20,995		23,998
Net balance at end of year		28,455		27,717
Plus:  reinsurance recoverable		445		683
Balance at end of year	$	28,900	$	28,400

The liability for the IBNR plus expected development on reported claims associated with the Company’s health insurance claims is $28,455,000 at June 30, 2019.