The following table is a reconciliation of our unpaid losses and settlement expenses (LAE) for the first three months of 2022 and 2021:

	For the Three Months
	Ended March 31,
(in thousands)	2022			2021
Unpaid losses and LAE at beginning of year
Gross	$	2,043,555		$	1,750,049
Ceded		(608,086	)		(443,729	)
Net	$	1,435,469		$	1,306,320

Increase (decrease) in incurred losses and LAE
Current accident year	$	150,999		$	142,013
Prior accident years		(45,475	)		(37,121	)
Total incurred	$	105,524		$	104,892

Loss and LAE payments for claims incurred
Current accident year	$	(7,875	)	$	(5,962	)
Prior accident years		(82,851	)		(64,896	)
Total paid	$	(90,726	)	$	(70,858	)

Net unpaid losses and LAE at March 31	$	1,450,267		$	1,340,354

Unpaid losses and LAE at March 31
Gross	$	2,081,712		$	1,795,275
Ceded		(631,445	)		(454,921	)
Net	$	1,450,267		$	1,340,354

For the first three months of 2022, incurred losses and LAE included $45.5 million of favorable development on prior years’ loss reserves. Professional services, general liability, transportation, commercial excess, personal umbrella, marine, commercial property and surety were drivers of the favorable development. No products experienced significant adverse development.

For the first three months of 2021, incurred losses and LAE included $37.1 million of favorable development on prior years’ loss reserves. General liability, transportation, small commercial, professional services, personal umbrella and surety were drivers of the favorable development. No products experienced significant adverse development.

Actuarial models base future emergence on historical experience, with adjustments for current trends, and the appropriateness of these assumptions involved more uncertainty as of March 31, 2022. We expect the timing of loss emergence and ultimate loss ratios for certain coverages we underwrite will be affected as a result of COVID-19 and the related economic impact. The industry is experiencing new issues, including the postponement of civil court cases, the extension of various statutes of limitations and changes in settlement trends. Our recorded reserves include consideration of these factors, but the duration and degree to which these issues persist, along with potential legislative, regulatory or judicial actions, could result in loss reserve deficiencies and reduce earnings in future periods.