POLICY LIABILITIES

9 Months Ended

Sep. 30, 2018

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



	Three Months Ended September 30,							Nine Months Ended September 30,
(In millions)		2018			2017				2018			2017
Unpaid supplemental health claims, beginning of period		$	3,942		$	3,872			$	3,881		$	3,707
Less reinsurance recoverables		29			30				28			27
Net balance, beginning of period		3,913			3,842				3,853			3,680
Add claims incurred during the period related to:
Current year		1,760			1,759				5,381			5,278
Prior years		(131		)	(126		)		(456		)	(386		)
Total incurred		1,629			1,633				4,925			4,892
Less claims paid during the period on claims incurred during:
Current year		1,357			1,357				3,109			3,074
Prior years		217			234				1,751			1,697
Total paid		1,574			1,591				4,860			4,771
Effect of foreign exchange rate changes on unpaid claims		(59		)	(14		)		(9		)	69
Net balance, end of period		3,909			3,870				3,909			3,870
Add reinsurance recoverables		29			30				29			30
Unpaid supplemental health claims, end of period		3,938			3,900				3,938			3,900
Unpaid life claims, end of period		592			468				592			468
Total liability for unpaid policy claims		$	4,530		$	4,368			$	4,530		$	4,368

The incurred claims development related to prior years reflects favorable claims experience compared to previous estimates. The favorable claims development of $456 million for the nine-month period ended September 30, 2018 comprises approximately $325 million from Japan, which represents approximately 71% of the total. Excluding the impact of foreign exchange of a loss of approximately $13 million from December 31, 2017 to September 30, 2018, the favorable claims development in Japan would have been approximately $312 million, representing approximately 68% of the total.

The Company has experienced continued favorable claim trends in 2018 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.

The remainder of the favorable claims development related to prior years for the nine-month period ended September 30, 2018, reflects Aflac U.S. favorable claims experience compared to previous estimates, primarily in the cancer and accident lines of business.