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

6 Months Ended

Jun. 30, 2020

Notes

Liability for Future Policy Benefits and Unpaid Claims Disclosure

Note 10.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, 2020
		Specialty		DBL and		Group		All Other
		Health		PFL		Disability		Lines		Total
Balance at beginning of year	$	42,228	$	23,438	$	80,079	$	19,057	$	164,802
Less: reinsurance recoverable		1,717		664		23,322		11,290		36,993
Net balance at beginning of year		40,511		22,774		56,757		7,767		127,809
Amount incurred, related to:
Current year		45,430		43,970		19,093		11,182		119,675
Prior years		(2,422)		(3,451)		(1,553)		(3,207)		(10,633)
Total incurred		43,008		40,519		17,540		7,975		109,042
Amount paid, related to:
Current year		18,722		19,252		4,010		4,979		46,963
Prior years		23,360		7,818		12,125		2,147		45,450
Total paid		42,082		27,070		16,135		7,126		92,413
Net balance at end of period		41,437		36,223		58,162		8,616		144,438
Plus:  reinsurance recoverable		1,802		647		22,463		10,427		35,339
Balance at end of period	$	43,239	$	36,870	$	80,625	$	19,043	$	179,777

		Six Months Ended June 30, 2019
		Specialty		DBL and		Group		All Other
		Health		PFL		Disability		Lines		Total
Balance at beginning of year	$	38,363	$	21,080	$	82,222	$	18,450	$	160,115
Less: reinsurance recoverable		1,335		719		24,712		11,356		38,122
Net balance at beginning of year		37,028		20,361		57,510		7,094		121,993
Amount incurred, related to:
Current year		40,873		29,941		17,152		8,770		96,736
Prior years		(3,158)		(1,186)		(3,053)		(744)		(8,141)
Total incurred		37,715		28,755		14,099		8,026		88,595
Amount paid, related to:
Current year		17,666		16,188		3,340		4,450		41,644
Prior years		19,092		5,930		9,697		2,523		37,242
Total paid		36,758		22,118		13,037		6,973		78,886
Net balance at end of period		37,985		26,998		58,572		8,147		131,702
Plus:  reinsurance recoverable		1,244		691		24,197		11,150		37,282
Balance at end of period	$	39,229	$	27,689	$	82,769	$	19,297	$	168,984

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.

Net favorable (unfavorable) development in the Specialty Health segment, as depicted in the tables above, is comprised of the following lines of business for the period indicated (in thousands):

		Six Months Ended
		June 30,
Specialty Health segment:		2020		2019
Short-term Medical	$	286	$	(29)
Occupational Accident		798		1,421
Limited Medical		241		472
Critical Illness		397		185
Group Gap		513		198
Fixed Indemnity Limited Benefit		(736)		166
Pet		450		170
All other specialty health lines		473		575
Total Specialty Health segment	$	2,422	$	3,158

In 2020, net favorable development in the various lines of the Specialty Health segment shown above is primarily due to better than expected claim development. Unfavorable development in the Fixed Indemnity Limited Benefit line in 2020 is primarily due to higher than expected claim severity on a small number of policies. In 2019, favorable development in the occupational accident line, in run-off, is mainly due to some claims settling for amounts less than anticipated and due to a lower level of employer liability claims than anticipated in relation to historical levels. Net favorable development in the other lines of Specialty Health business in 2019 is primarily due to better than expected claim development.

In 2020, the net favorable development in the DBL and PFL business is mainly due to due to favorable premium refund reserve adjustments in the DBL line of business. In 2019, net favorable development is primarily due to favorable DBL claims experience.

In 2020, favorable development in the group disability business is primarily due to a reduction in open claims, specifically, new claims, in the LTD line, partially offset by an increase in the overall frequency and severity of claims in the STD line. In 2019, favorable development in the group disability business is primarily due to better than expected claim development in terms of duration and net payments in the LTD business.

All other lines, primarily life and other individual health products and including our medical stop-loss business in run-off, experienced favorable development in 2020 and 2019 that is primarily related to the group term life business due to continued improvements in experience and updated assumptions for the Paid-Up Life business.

Included in the preceding rollforwards 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,
		2020		2019
Balance at beginning of year	$	31,259	$	26,068
Less: reinsurance recoverable		1,113		851
Net balance at beginning of year		30,146		25,217
Amount incurred, related to:
Current year		23,627		25,855
Prior years		(1,184)		(1,622)
Total incurred		22,443		24,233
Amount paid, related to:
Current year		8,260		7,838
Prior years		16,382		13,157
Total paid		24,642		20,995
Net balance at end of period		27,947		28,455
Plus:  reinsurance recoverable		1,406		445
Balance at end of period	$	29,353	$	28,900

The $27,947,000 net balance of the Company’s health insurance claims liability at June 30, 2020 shown in the table above is all IBNR plus expected development on reported claims.