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

9 Months Ended

Sep. 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).

		Nine Months Ended
		September 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		145,938		127,544
Prior years		(15,950)		(19,152)
Total incurred		129,988		108,392
Amount paid, related to:
Current year		76,395		65,380
Prior years		51,326		49,916
Total paid		127,721		115,296
Net balance at end of year		124,260		119,643
Plus:  reinsurance recoverable		37,169		38,525
Balance at end of year	$	161,429	$	158,168

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 $15,950,000 in 2019 related to prior years consists of favorable developments of $4,370,000 in Specialty Health reserves, $10,132,000 in the group disability reserves, $1,291,000 in the other individual life, annuities and other reserves, and $157,000 in Medical Stop-Loss reserves. Specialty Health net favorable development occurred primarily in the fixed indemnity limited benefit, short-term medical, occupational accident and dental lines of business.  Group Disability net favorable development was primarily due to favorable claim experience in the New York short-term disability (“DBL”) and group long-term disability ("LTD") lines of business. The net favorable development of the DBL line is mainly due to the reversal of potential policyholders’ premium refund for prior years for better than expected claim experience.  The Company settled the Paid Family Leave (“PFL”) risk adjustment payment for the 2018 year with no adjustment to the DBL line of business. The overall net favorable development of $19,152,000 in 2018 related to prior years primarily consists of favorable developments of $9,729,000 in the Specialty Health reserves, $7,862,000 in the group disability reserves, $1,346,000 in the other individual life, annuities and other reserves, and $215,000 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
		Nine Months Ended
		September 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		38,950		37,099
Prior years		(2,370)		(8,266)
Total incurred		36,580		28,833
Amount paid, related to:
Current year		15,630		14,880
Prior years		15,357		19,507
Total paid		30,987		34,387
Net balance at end of year		30,810		26,588
Plus:  reinsurance recoverable		919		865
Balance at end of year	$	31,729	$	27,453

The liability for the IBNR plus expected development on reported claims associated with the Company’s health insurance claims is $30,810,000 at September 30, 2019.