| 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. |
