Claims Reserve

3 Months Ended

Mar. 31, 2019

Liability for Unpaid Claims and Claims Adjustment Expense, Claims Paid [Abstract]

Supplementary Insurance Information, for Insurance Companies Disclosure [Text Block]

Reserve for Veterinary Invoices

The reserve for veterinary invoices is an estimate of the future amount the Company will pay for veterinary invoices that are dated as of, or prior to, its balance sheet date. The reserve also includes the Company's estimate of related internal processing costs. The reserve estimate involves actuarial projections, and is based on management's assessment of facts and circumstances currently known, and assumptions about anticipated patterns. The reserve is made for each of the Company's segments, subscription and other business, and is continually refined as the Company receives and pays veterinary invoices. Changes in management's assumptions and estimates may have a relatively large impact to the reserve and associated expense.

Reserve for veterinary invoices

Summarized below are the changes in the total liability for the Company's subscription business segment (in thousands):

	Three Months Ended March 31,
Subscription	2019		2018
Reserve at beginning of year	$	13,875	$	11,059
Veterinary invoices during the period related to:
Current year	53,436		45,198
Prior years	202		(61		)
Total veterinary invoice expense	53,638		45,137
Amounts paid during the period related to:
Current year	42,650		36,142
Prior years	10,015		8,250
Total paid	52,665		44,392
Non-cash expenses	201		156
Reserve at end of period	$	14,647	$	11,648

The Company's reserve for the subscription business segment increased from $13.9 million at December 31, 2018 to $14.6 million at March 31, 2019. This change was comprised of $53.6 million in expense recorded during the period less $52.7 million in payments of veterinary invoices. The $53.6 million in veterinary invoice expense incurred included an adjustment of $0.2 million to the reserves relating to prior years, which was the result of ongoing analysis of recent payment trends. For the three months ended March 31, 2018, the Company decreased prior year reserves by $0.1 million as a result of analysis of payment trends.

Summarized below are the changes in total liability for the Company's other business segment (in thousands):

	Three Months Ended March 31,
Other Business	2019			2018
Reserve at beginning of year	$	2,187		$	1,697
Veterinary invoices during the period related to:
Current year	7,995			5,218
Prior years	(351		)	(242		)
Total veterinary invoice expense	7,644			4,976
Amounts paid during the period related to:
Current year	5,856			3,734
Prior years	1,447			1,137
Total paid	7,303			4,871
Non-cash expenses	—			—
Reserve at end of period	$	2,528		$	1,802

The Company’s reserve for the other business segment increased from $2.2 million at December 31, 2018 to $2.5 million at March 31, 2019. This change was comprised of $7.6 million in expense recorded during the period less $7.3 million in payments of veterinary invoices. The $7.6 million in veterinary invoice expense incurred included a reduction of $0.4 million to the reserves relating to prior years, which was the result of ongoing analysis of recent payment trends. For the three months ended March 31, 2018, the Company decreased prior year reserves by $0.2 million as a result of analysis of payment trends.

Reserve for veterinary invoices, by year of occurrence

In the following tables, the reserve for veterinary invoices for each segment is presented as the amount (in thousands) by year the veterinary invoice relates to, referred to as the year of occurrence.

Subscription	As of March 31, 2019
Year of Occurrence
2017 and prior	$	1,042
2018	3,020
2019	10,585
	$	14,647

Other Business	As of March 31, 2019
Year of Occurrence
2017 and prior	$	12
2018	377
2019	2,139
	$	2,528