POLICY LIABILITIES

9 Months Ended

Sep. 30, 2021

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


	Three Months Ended September 30,					Nine Months Ended September 30,
(In millions)		2021		2020			2021		2020
Unpaid supplemental health claims, beginning of period		$	4,162	$	4,041		$	4,389	$	3,968
Less reinsurance recoverables		37		37			39		31
Net balance, beginning of period		4,125		4,004			4,350		3,937
Add claims incurred during the period related to:
Current year		1,720		1,780			5,302		5,354
Prior years		(215)		(105)			(739)		(408)
Total incurred		1,505		1,675			4,563		4,946
Less claims paid during the period on claims incurred during:
Current year		1,279		1,295			2,947		2,971
Prior years		219		249			1,676		1,811
Total paid		1,498		1,544			4,623		4,782
Effect of foreign exchange rate changes on unpaid claims		(29)		42			(187)		76
Net balance, end of period		4,103		4,177			4,103		4,177
Add reinsurance recoverables		39		40			39		40
Unpaid supplemental health claims, end of period		4,142		4,217			4,142		4,217
Unpaid life claims, end of period		767		759			767		759
Total liability for unpaid policy claims		$	4,909	$	4,976		$	4,909	$	4,976

The incurred claims development related to prior years reflects favorable claims experience compared to previous estimates. The favorable claims development of $739 million for the nine-month period ended September 30, 2021 comprises approximately $369 million from Japan and $370 million from the U.S., representing 49.9% and 50.1% of the total, respectively. Excluding the impact of foreign exchange of a loss of approximately $11 million from December 31, 2020 to September 30, 2021, the favorable claims development in Japan would have been approximately $380 million, representing approximately 51% of the total.

The Company has experienced continued favorable claim trends in 2021 for its core health products in Japan. During the first nine months of 2021, there were impacts from lower utilization of healthcare services, due to the COVID-19 pandemic. This impacted both cancer and medical products, as the Japan population was avoiding doctor and hospital visits and staying home more. This resulted in lower sickness, accident, and cancer incurred claims. 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.

For the majority of the Company's major U.S. accident and health lines of business, including accident, hospital indemnity, cancer, critical illness and short-term disability, the incurred claims development related to prior years reflects favorable claims experience compared to previous estimates. The U.S. portion of the favorable claims development includes $143 million related to refinements in estimates for COVID and non-COVID claims as experience emerged.