Note 6. Loss Reserves

We record reserves for estimated losses under insurance policies that we write and for loss adjustment expenses related to the investigation and settlement of policy claims. Our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid as of a given point in time. The reserves for loss and loss adjustment expenses are estimated using individual case-basis valuations, statistical analyses and estimates based upon experience for unreported claims and their associated loss and loss adjustment expenses. Such estimates may be more or less than the amounts ultimately paid when the claims are settled. The estimates are subject to the effects of trends in loss severity and frequency. Although considerable variability is inherent in these estimates, management believes that the reserves for loss and loss adjustment expenses are adequate. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes known. Any adjustments are included in current operations. See Note 9 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 for additional information regarding the Company’s loss and loss adjustment expense development.

The following table provides the Company’s liability for unpaid loss and loss adjustment expenses, net of related amounts recoverable from reinsurers, for the six months ended June 30, 2018 and 2017:

	Six Months Ended June 30,
	2018			2017
	(in thousands)
Balance, beginning of period	$	771,845		$	742,776
Less amounts recoverable from reinsurers on unpaid loss and loss adjustment expenses		84,889			78,256
Net balance, beginning of period		686,956			664,520
Add incurred related to:
Current accident year		126,060			119,828
Prior accident years		(20,822	)		(17,184	)
Total incurred		105,238			102,644
Less paid related to:
Current accident year		18,386			15,298
Prior accident years		84,194			80,571
Total paid		102,580			95,869
Net balance, end of period		689,614			671,295
Add amounts recoverable from reinsurers on unpaid loss and loss adjustment expenses		93,987			78,464
Balance, end of period	$	783,601		$	749,759

The foregoing reconciliation reflects favorable development of the net reserves at June 30, 2018 and June 30, 2017. The favorable development reduced loss and loss adjustment expenses incurred by $20.8 million and $17.2 million in 2018 and 2017, respectively. The revisions to the Company’s reserves reflect new information gained by claims adjusters in the normal course of adjusting claims and is reflected in the financial statements when the information becomes available. It is typical for more serious claims to take several years or longer to settle and the Company continually revises estimates as more information about claimants’ medical conditions and potential disability becomes known and the claims get closer to being settled. Multiple factors can cause loss development both unfavorable and favorable. The favorable loss development we experienced across accident years was largely due to favorable case reserve development from closed claims and claims where the worker had reached maximum medical improvement.