POLICY LIABILITIES

Changes in the liability for unpaid policy claims were as follows:



	Three Months Ended September 30,							Nine Months Ended September 30,
(In millions)		2017			2016				2017			2016
Unpaid supplemental health claims, beginning of period		$	3,872		$	3,941			$	3,707		$	3,548
Less reinsurance recoverables		30			30				27			26
Net balance, beginning of period		3,842			3,911				3,680			3,522
Add claims incurred during the period related to:
Current year		1,759			1,843				5,278			5,309
Prior years		(126		)	(148		)		(386		)	(374		)
Total incurred		1,633			1,695				4,892			4,935
Less claims paid during the period on claims incurred during:
Current year		1,357			1,462				3,074			3,160
Prior years		234			232				1,697			1,722
Total paid		1,591			1,694				4,771			4,882
Effect of foreign exchange rate changes on unpaid claims		(14		)	42				69			379
Net balance, end of period		3,870			3,954				3,870			3,954
Add reinsurance recoverables		30			31				30			31
Unpaid supplemental health claims, end of period		3,900			3,985				3,900			3,985
Unpaid life claims, end of period		468			361				468			361
Total liability for unpaid policy claims		$	4,368		$	4,346			$	4,368		$	4,346

The incurred claims development related to prior years reflects favorable claims experience, compared with previous estimates, primarily in the Company's lines of business in Japan. The favorable claims development of $386 million for the nine-month period ended September 30, 2017 comprises approximately $301 million from Japan, which represents approximately 78% of the total. Excluding the impact of foreign exchange of a loss of approximately $13 million from December 31, 2016 to September 30, 2017, the favorable claims development in Japan would have been approximately $315 million, representing approximately 82% of the total.

The Company has experienced continued favorable claim trends in 2017 for its core health products in Japan. The Company's experience in Japan related to the average length of stay in the hospital for cancer treatment has shown continued decline in the current period. In addition, cancer treatment patterns in Japan are continuing to be influenced by significant advances in early-detection techniques and by the increased use of pathological diagnosis rather than clinical exams. Additionally, follow-up radiation and chemotherapy treatments are occurring more often on an outpatient basis. Such changes in treatment not only increase the quality of life and initial outcomes for the patients, but also decrease the average length of each hospital stay, resulting in favorable claims development.