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, 2018, 2017 and 2016.



	Years ended December 31,
	2018			2017		2016
	(In thousands)
Policy claims payable at January 1	$	8,610		9,538		9,653
Less: reinsurance recoverable	367			407		543
Net balance at January 1	8,243			9,131		9,110
Add claims incurred, related to:
Current year	24,793			25,036		26,000
Prior years	(197		)	(209	)	(493	)
	24,596			24,827		25,507
Deduct claims paid, related to:
Current year	18,933			18,037		18,681
Prior years	6,803			7,678		6,805
	25,736			25,715		25,486
Net balance December 31	7,103			8,243		9,131
Plus: reinsurance recoverable	511			367		407
Policy claims payable, December 31	$	7,614		8,610		9,538

The Company experienced favorable development in 2018 of $197,000 and favorable development in 2017 of $209,000. 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, 2018, 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 2014 through 2015 is supplementary information to the consolidated financial statements and is unaudited.



								As of December 31, 2018
	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	2014		2015	2016	2017	2018
($ In thousands)	(Unaudited)
2014	$	1,744	1,650	1,575	1,570	1,560		—	254
2015			1,777	1,731	1,692	1,666		—	359
2016				2,071	2,096	2,066		5	531
2017					1,761	1,715		12	596
2018						1,760		193	447
Total						$	8,767

The following table presents paid claims development as of December 31, 2018, net of reinsurance. Claims data for 2014 through 2015 are unaudited.



	Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
	Years ended December 31,
Accident Year	2014		2015	2016	2017	2018
($ In thousands)	(Unaudited)
2014	$	1,361	1,556	1,560	1,560	1,560
2015			1,410	1,637	1,638	1,666
2016				1,680	2,061	2,061
2017					1,359	1,652
2018						1,507
Total						$	8,446
All outstanding liabilities before 2014, net of reinsurance						$	—
Liabilities for claims and claim adjustment expenses, net of reinsurance						$	321

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,
	2018		2017
	(In thousands)
Net outstanding liabilities
Special property	$	321	501
Other short-duration insurance lines	157		72
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance	478		573
Reinsurance recoverable on unpaid claims
Special property	—		—
Other insurance lines	65		261
Total reinsurance recoverable on unpaid claims	65		261
Insurance lines other than short duration	7,071		7,776
Total gross liability for unpaid claims and claim adjustment expenses	$	7,614	8,610

The following is supplementary information to the consolidated financial statements about average historical claims duration as of December 31, 2018.



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

Special Property	83.61	%	15.16	%	0.10	%	0.79	%	—	%