Policy Liabilities and Short Duration Contracts

Various assumptions used to determine the future policy benefit reserves of life insurance include the following: a) valuation interest rates; b) mortality assumptions; and c) withdrawals.

The following table presents information on changes in the liability for life, accident and health and property policy and contract claims for the years ended December 31, 2017, 2016 and 2015.



	Years ended December 31,
	2017			2016		2015
	(In thousands)
Policy claims payable at January 1	$	9,538		9,653		9,560
Less: reinsurance recoverable	407			543		950
Net balance at January 1	9,131			9,110		8,610
Add claims incurred, related to:
Current year	25,036			26,000		26,911
Prior years	(209		)	(493	)	(197	)
	24,827			25,507		26,714
Deduct claims paid, related to:
Current year	18,037			18,681		19,584
Prior years	7,678			6,805		6,630
	25,715			25,486		26,214
Net balance December 31	8,243			9,131		9,110
Plus: reinsurance recoverable	367			407		543
Policy claims payable, December 31	$	8,610		9,538		9,653

The Company experienced favorable development in 2017 of $209,000 and favorable development in 2016 of $493,000. No unusual claims or trends have been noted.

Short Duration Contracts

The Company's short duration contracts consist of credit life and credit disability in the Life segment and property insurance in the Home Service segment. The credit insurance lines are an immaterial part of short duration contracts so the following disclosures cover only the property insurance line of business in the Home Service segment.

Special Property Insurance (Allied and Fire)

The following table presents incurred claims development as of December 31, 2017, 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 for the last five years as these claims rarely pay out over a longer period of time. Claims data for 2013 through 2015 is supplementary information to the consolidated financial statements and is unaudited.



								As of December 31, 2017
	Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance							Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported Claims	Cumulative Number of Reported Claims
	Years ended December 31,
Accident Year	2013		2014	2015	2016	2017
($ In thousands)	(Unaudited)
2013	$	2,058	1,977	1,970	1,964	1,964		—	328
2014			1,744	1,650	1,575	1,570		—	254
2015				1,777	1,731	1,692		4	358
2016					2,071	2,096		6	531
2017						1,761		210	555
Total						$	9,083

The following table presents paid claims development as of December 31, 2017, net of reinsurance. Claims data for 2013 through 2015 are unaudited.



	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years ended December 31,
Accident Year	2013		2014	2015	2016	2017
(In thousands)	(Unaudited)
2013	$	1,751	1,964	1,964	1,964	1,964
2014			1,361	1,556	1,560	1,560
2015				1,410	1,637	1,638
2016					1,680	2,061
2017						1,359
Total						$	8,582
All outstanding liabilities before 2013, net of reinsurance						$	—
Liabilities for claims and claim adjustment expenses, net of reinsurance						$	501

The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses in the consolidated statement of financial position is as follows.



	Year Ended December 31,
	2017		2016
	(In thousands)
Net outstanding liabilities
Special property	$	501	500
Other short-duration insurance lines	72		43
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance	573		543

Reinsurance recoverable on unpaid claims
Special property	—		—
Other insurance lines	261		340
Total reinsurance recoverable on unpaid claims	261		340

Insurance lines other than short duration	7,776		8,655

Total gross liability for unpaid claims and claim adjustment expenses	$	8,610	9,538

The following is supplementary information to the consolidated financial statements about average historical claims duration as of December 31, 2017.



Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Unaudited)
Years	1		2		3		4		5

Special Property	83.30	%	13.68	%	0.10	%	—	%	—	%