Liability for Unpaid Claims and Claim Adjustment Expenses

6 Months Ended

Jun. 30, 2022

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 Six Months Ended June 30,
	2022		2021
Policy liabilities and unpaid claims balance as of January 1,	$	331,703	$	233,438
Less: liabilities of policy-holder account balances, gross	(801)		(5,419)
Less: non-insurance warranty benefit claim liabilities	(10,785)		(30,664)
Gross liabilities for unpaid losses and loss adjustment expenses	320,117		197,355
Less: reinsurance recoverable on unpaid losses - short duration	(165,129)		(113,163)
Less: other lines, gross	(576)		(247)
Net balance as of January 1, short duration	154,412		83,945

Incurred (short duration) related to:
Current year	164,868		116,868
Prior years	703		2,581
Total incurred	165,571		119,449

Paid (short duration) related to:
Current year	91,245		73,847
Prior years	11,804		5,398
Total paid	103,049		79,245

Net balance as of June 30, short duration	216,934		124,149
Plus: reinsurance recoverable on unpaid losses - short duration	219,349		137,194
Plus: other lines, gross	496		689
Gross liabilities for unpaid losses and loss adjustment expenses	436,779		262,032
Plus: liabilities of policy-holder account balances, gross	42		3,873
Plus: non-insurance warranty benefit claim liabilities	4,257		19,735
Policy liabilities and unpaid claims balance as of June 30,	$	441,078	$	285,640

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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Short duration incurred	$	82,846	$	69,472	$	165,571	$	119,449
Other lines incurred	(29)		45		362		45
Unallocated loss adjustment expenses	136		224		296		498
Total losses incurred	$	82,953	$	69,741	$	166,229	$	119,992

During the six months ended June 30, 2022, and 2021, the Company experienced an increase in prior year development of $703 and $2,581, respectively, primarily as a result of higher-than-expected claim severity 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 these 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 and our review of the statement of actuarial opinions provided by our actuarial consultants, we believe that the amounts recorded for policy liabilities and unpaid claims reasonably represent the amount necessary to pay all claims and related expenses which may arise from incidents that have occurred as of the balance sheet date.