Reserve for Known and Incurred But Not Reported Claims

12 Months Ended

Dec. 31, 2021

Reserve for Known and Incurred But Not Reported Claims

NOTE 12. Reserve for Known and Incurred But Not Reported Claims:

Activity in the reserve for known and incurred but not reported claims is summarized as follows:

	December 31,
	2021			2020		2019
	(in millions)
Balance at beginning of year	$	1,178		$	1,063	$	1,042
Provision related to:
Current year		570			532		436
Prior years		19			48		10
		589			580		446
Payments, net of recoveries, related to:
Current year		292			268		227
Prior years		190			203		188
		482			471		415
Other		(1	)		6		(10	)
Balance at end of year	$	1,284		$	1,178	$	1,063

Current year payments, net of recoveries, include $264 million, $250 million and $211 million for the years ended December 31, 2021, 2020 and 2019, respectively, that relate to the Company’s specialty insurance segment. Prior year payments, net of recoveries, include $64 million, $57 million and $42 million for the years ended December 31, 2021, 2020 and 2019, respectively, that relate to the Company’s specialty insurance segment.

Payments and recoveries on reinsured losses for the Company’s property and casualty insurance business were immaterial for the year December 31, 2021. Payments on reinsured losses for the Company’s property and casualty insurance business totaled $4 million, and $21 million, and recoveries totaled $3 million, and $10 million for the years ended December 31, 2020 and 2019, respectively. Payments and recoveries on reinsured losses for the Company’s title insurance business were immaterial during the years ended December 31, 2021, 2020 and 2019.

The provision for title insurance losses, expressed as a percentage of title insurance premiums and escrow fees, was 4.0%, 5.0%, and 4.0% for the years ended December 31, 2021, 2020, and 2019, respectively.

The current year loss rate of 4.0% reflects the ultimate loss rate for the current policy year and no change in the loss reserve estimates for prior policy years.

The 2020 loss rate of 5.0% reflected an ultimate loss rate of 4.5% for policy year 2020 and a net increase in the loss reserve estimates for prior policy years of 0.5%, or $26 million.

The 2019 loss rate of 4.0% reflected the ultimate loss rate for policy year 2019 and no change in the loss reserve estimates for prior policy years.

A summary of the Company’s loss reserves is as follows:


(dollars in millions)	December 31, 2021				December 31, 2020
Known title claims	$	67	5.2	%	$	64	5.4	%
IBNR title claims		1,143	89.0	%		1,026	87.1	%
Total title claims		1,210	94.2	%		1,090	92.5	%
Non-title claims		74	5.8	%		88	7.5	%
Total loss reserves	$	1,284	100.0	%	$	1,178	100.0	%

Short-Duration Insurance Contracts

Specialty Insurance Segment

The following reflects information as of December 31, 2021 about incurred and paid claims development, net of reinsurance, as well as cumulative claims frequency by claims event, and the total of incurred but not reported claims plus expected development on reported claims included with the net incurred claims amounts.

The information below about incurred and paid claims development for the years ended December 31, 2012 to 2020, is presented as supplementary information.


	Incurred claims and allocated claim adjustment expenses, net of reinsurance												December 31, 2021
Accident	Years ended December 31,													Total of IBNR liabilities plus expected development on reported	Cumulative number of reported
Year		2012*	2013*	2014*	2015*	2016*	2017*	2018*	2019*	2020*		2021		claims	claims
	(in millions)
2012	$	157	159	160	161	161	161	162	162	162	$	162	$	—	0.7
2013			183	184	185	185	185	185	185	185		185		—	0.8
2014				191	191	191	191	191	191	191		191		—	0.8
2015					222	226	226	227	227	227		227		—	0.9
2016						246	249	252	253	254		253		—	1.0
2017							267	275	278	279		279		—	1.0
2018								264	269	270		267		1	1.1
2019									251	268		266		4	1.1
2020										293		303		5	1.2
2021												307		16	1.2
										Total	$	2,440

*Amounts unaudited.


		Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance

Accident		Years ended December 31,
Year		2012*	2013*	2014*	2015*	2016*	2017*	2018*	2019*	2020*		2021
	(in millions)
2012	$	131	154	157	159	160	160	161	162	162	$	162
2013			151	180	183	184	184	185	185	185		185
2014				157	186	188	190	190	191	191		191
2015					181	218	223	225	226	226		226
2016						206	243	248	251	252		253
2017							220	267	271	272		275
2018								223	256	262		264
2019									207	252		259
2020										243		293
2021												260
										Total	$	2,368
				All outstanding liabilities before 2012, net of reinsurance								—
				Liabilities for claims and claims adjustment expenses, net of reinsurance							$	72

*Amounts unaudited.

A reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expense at December 31, 2021, is as follows:

		December 31, 2021
	(in millions)
Liability for unpaid claims and claim adjustment expenses, net of reinsurance:
Specialty insurance	$	72
Unallocated claims adjustment expenses:
Specialty insurance		2
Insurance lines other than short-duration:
Title insurance		1,210
Liability for unpaid claims and claims adjustment expenses	$	1,284

Supplementary information about average historical claims duration for the Company’s specialty insurance segment as of December 31, 2021, is as follows:


Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)

Years	1		2		3		4		5		6		7		8		9		10

Annual
payout	83.0	%	13.6	%	1.6	%	0.8	%	0.5	%	0.1	%	0.1	%	0.1	%	0.0	%	0.0	%