4. HISTORICAL LOSS AND LAE DEVELOPMENT

The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the first nine months of 2018 and 2017.


	For the Nine-Month Periods
	Ended September 30,
(in thousands)	2018		2017
Unpaid losses and LAE at beginning of year
Gross	$	1,271,503	$	1,139,337
Ceded		(301,991)		(288,224)
Net	$	969,512	$	851,113

Increase (decrease) in incurred losses and LAE
Current accident year	$	342,807	$	343,535
Prior accident years		(38,502)		(36,608)
Total incurred	$	304,305	$	306,927

Loss and LAE payments for claims incurred
Current accident year	$	(45,008)	$	(37,333)
Prior accident year		(171,725)		(158,052)
Total paid	$	(216,733)	$	(195,385)

Net unpaid losses and LAE at September 30,	$	1,057,084	$	962,655

Unpaid losses and LAE at September 30,
Gross	$	1,377,111	$	1,253,729
Ceded		(320,027)		(291,074)
Net	$	1,057,084	$	962,655

For the first nine months of 2018, incurred losses and LAE included $38.5 million of favorable development on prior years’ loss reserves. The majority of products experienced modest amounts of favorable development on prior accident years, with notable contributions from commercial and personal umbrella, general liability, marine and surety. Executive products, transportation and medical professional liability were exceptions, experiencing adverse development.

For the first nine months of 2017, incurred losses and LAE included $36.6 million of favorable development on prior years’ loss reserves. Commercial umbrella, general liability, surety and marine were drivers of the favorable development, while adverse experience in transportation and medical professional liability partially offset the result.