Our liabilities for unpaid losses and loss adjustment expenses (also referred to as “claim liabilities”) under property and casualty insurance and reinsurance contracts are based upon estimates of the ultimate claim costs associated with claim occurrences as of the balance sheet date and include estimates for incurred-but-not-reported (“IBNR”) claims. A reconciliation of the changes in claim liabilities, excluding liabilities under retroactive reinsurance contracts (see Note 15), for each of the nine months ending September 30, 2020 and 2019 follows (in millions).

	2020			2019
Balances at beginning of year:
Gross liabilities	$	73,019		$	68,458
Reinsurance recoverable on unpaid losses		(2,855	)		(3,060	)
Net liabilities		70,164			65,398
Incurred losses and loss adjustment expenses:
Current accident year events		31,777			31,179
Prior accident years’ events		69			(396	)
Total		31,846			30,783
Paid losses and loss adjustment expenses:
Current accident year events		(11,691	)		(13,144	)
Prior accident years’ events		(15,259	)		(13,967	)
Total		(26,950	)		(27,111	)
Foreign currency translation adjustment		124			(178	)
Balances at September 30:
Net liabilities		75,184			68,892
Reinsurance recoverable on unpaid losses		2,857			3,105
Gross liabilities	$	78,041		$	71,997

Incurred losses and loss adjustment expenses shown in the preceding table were recorded in earnings and related to insured events occurring in the current year (“current accident year”) and events occurring in all prior years (“prior accident years”). We recorded a net increase in estimated ultimate liabilities for prior accident years of $69 million in the first nine months of 2020 and a net decrease of $396 million in the first nine months of 2019, which produced a corresponding increase and decrease in incurred losses and loss adjustment expenses. These changes in the ultimate liability estimates as percentages of the net liabilities at the beginning of each year were relatively insignificant.

In the first nine months of 2020, we reduced estimated ultimate liabilities for prior years’ loss events for primary insurance by $273 million and increased estimates for reinsurance liabilities by $342 million. The net decrease for primary insurance was primarily attributable to lower than anticipated private passenger automobile, medical professional liability and workers’ compensation claims. The net increase related to reinsurance included increased claims estimates for legacy casualty exposures. In the first nine months of 2019, the net decrease in estimated ultimate liabilities for prior accident years was primarily attributable to private passenger automobile, medical professional liability and workers’ compensation claims, partly offset by increased liabilities for legacy casualty exposures and other commercial insurance business.