Liability for Unpaid Claims and Claim Adjustment Expenses

The following tables present undiscounted information about incurred and paid claims development as of December 31, 2016, net of reinsurance, as well as cumulative claim frequency and the total of incurred-but-not-reported liabilities plus expected development on reported claims included within the net incurred claims amounts.

This information is presented in the aggregate for all short-duration contracts, due to the commonality of claims characteristics. The tables reflect three years of information because historically over 99% of incurred losses have been paid within three years of the accident period.

The information about incurred and paid claims development for the years ended December 31, 2014 and 2015 is presented as supplementary information and is unaudited.

Roll forward of Claim Liability

The following table presents the activity in the net liability for unpaid losses and allocated loss adjustment expenses of short-duration contracts:



	Year Ended December 31,
	2016			2015
Policy liabilities and unpaid claims balance at January 1	$	80,663		$	63,364
Less : liabilities of policy-holder accounts balances, gross	(19,037		)	(21,056		)
Less : non-insurance warranty benefit claim liabilities	(116		)	(171		)
Gross liabilities for unpaid losses and loss adjustment expenses	61,510			42,137
Less : reinsurance recoverable on unpaid losses - short duration	(42,341		)	(28,089		)
Less : other lines, gross	(163		)	(178		)
Net balance at January 1, short duration	19,006			13,870

Incurred (short duration) related to:
Current year	84,178			59,579
Prior years	(1,599		)	(4,152		)
Total incurred	82,579			55,427

Paid (short duration) related to:
Current year	62,989			41,578
Prior years	16,033			8,713
Total paid	79,022			50,291
Net balance at December 31, short duration	22,563			19,006
Plus : reinsurance recoverable on unpaid losses - short duration	63,112			42,341
Plus : other lines, gross	208			163
Gross liabilities for unpaid losses and loss adjustment expenses	85,883			61,510
Plus : liabilities of policy-holder accounts balances, gross	17,417			19,037
Plus : non-insurance warranty benefit claim liabilities	91			116
Policy liabilities and unpaid claims balance at December 31	$	103,391		$	80,663

The following schedule reconciles the total on short duration contracts per the table above to the amount of total losses incurred as presented in the consolidated statement of operations, excluding the amount for member benefit claims:



	Year Ended December 31,
	2016		2015
Total incurred	$	82,579	$	55,427
Other lines incurred	277		296
Unallocated loss adjustment expense	2,094		845
Total losses incurred	$	84,950	$	56,568

Incurred and Paid Development

The following table presents information about incurred and paid loss development and average claim duration as of December 31, 2016, net of reinsurance, as well as cumulative claim frequency and the total of incurred-but-not-reported liabilities plus expected development on reported claims included within the net incurred claims amounts. The cumulative number of reported claims represents open claims, claims closed with payment, and claims closed without payment. It does not include an estimated count of unreported claims. The number of claims is measured by claim event. The Company considers a claim that does not result in a liability as a claim closed without payment.



	Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance						As of December 31, 2016
	For the Years Ended December 31,						Total of Incurred-but-Not-Reported Liabilities Plus Expected Development of Reported Claims		Cumulative Number of Reported Claims
Accident Year	2014⁽¹⁾		2015⁽¹⁾		2016
2014	$	43,449	$	39,614	$	39,914	$	182	122
2015			59,579		57,470		$	132	176
2016					84,178		$	16,582	188
			Total		$	181,562

	Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the Years Ended December 31,
Accident Year	2014⁽¹⁾		2015⁽¹⁾		2016
2014	$	30,435	$	38,752	$	39,596
2015			41,578		56,445
2016					62,989
			Total		$	159,030
All outstanding liabilities before 2014, net of reinsurance					31
Liabilities for loss and loss adjustment expenses, net of reinsurance					$	22,563

⁽¹⁾ - The information presented for the years 2014 and 2015 is presented as unaudited supplemental information.

Duration

The following table presents unaudited supplementary information about average historical claims duration as of December 31, 2016 for short-duration contracts:



Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years	1	2	3
Short duration	75%	23%	2%

Reconciliation of Reserves to Balance Sheet

The following table presents a reconciliation of net outstanding liabilities for unpaid loss and loss adjustment expenses of short-duration contracts to the balance sheet value of policy liabilities and unpaid claims:



	As of
	December 31, 2016
Net outstanding liabilities:
Short duration	$	22,563
Insurance lines other than short-duration	40
Total liabilities for unpaid losses and loss adjustment expenses, net of reinsurance	22,603

Reinsurance recoverable on unpaid losses and loss adjustment expenses:
Short duration	63,112
Other insurance lines	168
Total reinsurance recoverable on unpaid losses and loss adjustment expenses	63,280

Total gross liability for unpaid losses and loss adjustment expenses	85,883
Liabilities of policy-holder accounts balances, gross	17,417
Non-insurance warranty benefit claim liabilities	91
Total policy liabilities and unpaid claims	$	103,391