Unpaid Losses and Loss Adjustment Expenses

9 Months Ended

Sep. 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:

	Nine  Months Ended September 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		19,925,024		13,984,532
Development of insured events of prior years		8,161,318		1,366,836
Total incurred losses and loss adjustment expenses		28,086,342		15,351,368
Loss and loss adjustment expense payments:
Attributable to insured events of the current year		5,685,642		4,531,844
Attributable to insured events of prior years		11,756,705		15,088,952
Total payments		17,442,347		19,620,796
Reserve for unpaid losses and loss adjustment expenses at September 30 – net of reinsurance		50,984,620		37,856,125
Reinsurance recoverable on unpaid losses and loss adjustment expenses		23,349,279		13,799,868
Reserve for unpaid losses and loss adjustment expenses at September 30 – gross of reinsurance	$	74,333,899	$	51,655,993

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.