Liability for Unpaid Claims and Claim Adjustment Expenses

3 Months Ended

Mar. 31, 2021

Liability for Unpaid Claims and Claim Adjustment Expenses

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 for the following periods:


	For the Three Months Ended March 31,
	2021		2020
Policy liabilities and unpaid claims balance as of January 1,	$	233,438	$	144,384
Less: liabilities of policy-holder account balances, gross	(5,419)		(11,589)
Less: non-insurance warranty benefit claim liabilities	(30,664)		(85)
Gross liabilities for unpaid losses and loss adjustment expenses	197,355		132,710
Less: reinsurance recoverable on unpaid losses - short duration	(113,163)		(88,599)
Less: other lines, gross	(247)		(230)
Net balance as of January 1, short duration	83,945		43,881

Incurred (short duration) related to:
Current year	50,013		43,604
Prior years	(36)		2,289
Total incurred	49,977		45,893

Paid (short duration) related to:
Current year	36,498		36,437
Prior years	1,914		3,003
Total paid	38,412		39,440

Net balance as of March 31, short duration	95,510		50,334
Plus: reinsurance recoverable on unpaid losses - short duration	124,375		88,428
Plus: other lines, gross	786		248
Gross liabilities for unpaid losses and loss adjustment expenses	220,671		139,010
Plus: liabilities of policy-holder account balances, gross	5,120		10,594
Plus: non-insurance warranty benefit claim liabilities	25,532		45,860
Policy liabilities and unpaid claims balance as of March 31,	$	251,323	$	195,464

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


	Three Months Ended March 31,
	2021		2020
Short duration incurred	$	49,977	$	45,893
Other lines incurred	1		—
Unallocated loss adjustment expenses	273		83
Total losses incurred	$	50,251	$	45,976

During the three months ended March 31, 2021, the Company experienced a decrease in prior year development of $36.

During the three months ended March 31, 2020, the Company experienced an increase in prior year development of $2,289, primarily as a result of higher than expected claim frequency from business written by a small group of producers of our personal and commercial lines of business.

Management considers the prior year development for each of the two years to be insignificant when considered in the context of our annual earned premiums, net as well as our net losses and loss adjustment expenses and member benefit claims expenses. We analyze our development on a quarterly basis and given the short duration nature of our products, favorable or adverse development emerges quickly and allows for timely reserve strengthening, if necessary, or modifications to our product pricing or offerings.

Based upon our internal analysis, we believe that the amounts recorded for policy liabilities and unpaid claims reasonably represents the amount necessary to pay all claims and related expenses which may arise from incidents that have occurred as of the balance sheet date.