Unpaid Loss and Loss Adjustment Expense

12 Months Ended

Dec. 31, 2023

Other liabilities for unpaid losses and loss adjustment expenses (also referred to as “claim liabilities”) under insurance contracts are based upon estimates of the ultimate claim costs associated with claim occurrences as of the balance sheet date and include estimates for incurred-but-not-reported (“IBNR”) claims. A reconciliation of the changes in claim liabilities, net of reinsurance, for each of the years ended December 31, 2023 and 2022 follows.


	2023		2022
Balances at beginning of year:
Gross liabilities	$	17,520	$	14,993
Reinsurance recoverable on unpaid losses	(715)		(1,892)
Net liabilities	16,805		13,101
Incurred losses and loss adjustment expenses:
Current accident year	39,303		37,837
Prior accident years	(3,634)		(652)
Total	35,669		37,185
Paid losses and loss adjustment expenses:
Current accident year	30,554		27,415
Prior accident years	6,752		6,066
Total	37,306		33,481
Balances at December 31:
Net liabilities	15,168		16,805
Reinsurance recoverable on unpaid losses	937		715
Gross liabilities	$	16,105	$	17,520

We recorded net reductions of estimated ultimate liabilities for prior accident years of $3,634 in 2023 and $652 in 2022. These reductions, as a percentage of net liabilities at the beginning of each year, were 21.6% in 2023 and 5.0% in 2022.

Our net incurred and paid liability losses and loss adjustment expenses are summarized by accident year below. IBNR and case development liabilities are as of December 31, 2023.


	Incurred Losses and Loss Adjustment Expenses through December 31,
Accident Year	2017*		2018*		2019*		2020*		2021*		2022*		2023		IBNR and Case Development Liabilities		Cumulative Number of Reported Claims
2017	$	29,627	$	28,778	$	28,895	$	28,537	$	28,189	$	28,213	$	28,171	$	179	4,343
2018			26,576		26,650		26,455		26,385		26,328		26,194		145		3,762
2019					27,331		26,746		26,444		26,325		25,972		141		3,681
2020							26,415		25,118		24,305		23,804		323		3,662
2021									26,555		26,527		26,267		1,874		3,685
2022											34,356		32,137		3,399		3,876
2023													35,450		8,198		3,611
													$	197,995


	Cumulative Paid Losses and Loss Adjustment Expenses through December 31,
Accident Year	2017*		2018*		2019*		2020*		2021*		2022*		2023
2017	$	22,293	$	25,491	$	26,991	$	27,584	$	27,815	$	27,990	$	27,992
2018			20,246		23,796		24,844		25,589		25,974		26,049
2019					20,755		23,787		24,647		25,357		25,831
2020							20,481		22,614		23,386		23,481
2021									19,649		22,800		24,393
2022											24,775		28,738
2023													27,252
Paid losses and loss adjustment expenses													183,736
Incurred less paid losses and loss adjustment expenses													14,259
Unpaid loss adjustment expenses													909
Net unpaid losses and loss adjustment expenses													$	15,168

*Unaudited required supplemental information

Loss and loss adjustment expense reserves include an amount for reported losses and an amount for losses incurred but not reported. We establish average liabilities based on expected severities for newly reported claims prior to establishing individual case reserves when insufficient time or information is available for specific claim estimates and for large volumes of minor physical damage claims that, once reported, are quickly settled. We establish case loss estimates for claims, including estimates for loss adjustment expenses, as the facts and merits of the claim are evaluated. Such reserves are necessarily based upon estimates, and while management, based on past experience, believes that the amount is adequate, the ultimate liability may be more or less than the amounts provided. We may record supplemental IBNR liabilities in certain situations when actuarial techniques are difficult to apply. The methods for making such estimates and for establishing the resulting reserves are continually reviewed, and any adjustments are reflected in operations annually.

First Guard

First Guard’s claim liabilities predominately relate to commercial truck claims. For such claims, we establish and evaluate unpaid claim liabilities using historical claims data and other data as necessary to determine our best estimate, with an annual review by certified actuaries and certified public accountants. Claim liabilities include average case, case development, and IBNR estimates.

Southern Pioneer

Southern Pioneer’s claim liabilities predominately relate to liquor liability, garage liability, and commercial property as well as homeowners and dwelling fire claims. For such claims, we establish and evaluate unpaid claim liabilities using standard actuarial methods and techniques. The actuarial methods utilize historical claims data, adjusted when deemed appropriate to reflect perceived changes in loss patterns. Claim liabilities include average case, case development, and IBNR estimates.