Unpaid Losses and Loss Adjustment Expenses

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Unpaid Losses and Loss Adjustment Expenses

NOTE 9 – UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

The following table provides an analysis of Crusader’s loss and loss adjustment expense reserves, including a reconciliation of the beginning and ending balance sheet liability for the periods indicated:

	Six  Months Ended June 30
	2020		2019
Reserve for unpaid losses and loss adjustment expenses at January 1 – gross of reinsurance	$	55,066,480	$	51,657,155
Less reinsurance recoverable on unpaid losses and loss adjustment expenses		14,725,855		9,531,602
Reserve for unpaid losses and loss adjustment expenses at January 1 – net of reinsurance		40,340,625		42,125,553
Incurred losses and loss adjustment expenses:
Provision for insured events of current year		10,539,635		9,685,514
Development of insured events of prior years		226,656		527,880
Total incurred losses and loss adjustment expenses		10,766,291		10,213,394
Loss and loss adjustment expense payments:
Attributable to insured events of the current year		3,266,570		2,670,068
Attributable to insured events of prior years		8,769,575		10,978,401
Total payments		12,036,145		13,648,469
Reserve for unpaid losses and loss adjustment expenses at June 30 – net of reinsurance		39,070,771		38,690,478
Reinsurance recoverable on unpaid losses and loss adjustment expenses		15,806,548		11,139,312
Reserve for unpaid losses and loss adjustment expenses at June 30 – gross of reinsurance	$	54,877,319	$	49,829,790

Some lines of insurance are commonly referred to as "long-tail" lines because of the extended time required before claims are ultimately settled. Lines of insurance in which claims are settled relatively quickly are called "short-tail" lines. It is generally more difficult to estimate loss reserves for long-tail lines because of the long period of time that elapses between the occurrence of a claim and its final disposition and the difficulty of estimating the settlement value of the claim. Crusader’s short-tail lines consist of its property coverages, and its long-tail lines consist of its liability coverages. However, Crusader’s long-tail liability claims tend to be settled relatively quicker than other long-tail lines not underwritten by Crusader, such as workers’ compensation, professional liability, umbrella liability, and medical malpractice. Since trends develop over longer periods of time on long-tail lines of business, the Company generally gives credibility to those trends more slowly than for short-tail or less volatile lines of business.