POLICY LIABILITIES

3 Months Ended

Mar. 31, 2022

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


	Three Months Ended March 31,
(In millions)		2022		2021
Unpaid supplemental health claims, beginning of period		$	4,067	$	4,389
Less reinsurance recoverables		37		39
Net balance, beginning of period		4,030		4,350
Add claims incurred during the period related to:
Current year		1,737		1,859
Prior years		(208)		(320)
Total incurred		1,529		1,539
Less claims paid during the period on claims incurred during:
Current year		468		511
Prior years		987		1,061
Total paid		1,455		1,572
Effect of foreign exchange rate changes on unpaid claims		(135)		(162)
Net balance, end of period		3,969		4,155
Add reinsurance recoverables		40		37
Unpaid supplemental health claims, end of period		4,009		4,192
Unpaid life claims, end of period		745		756
Total liability for unpaid policy claims		$	4,754	$	4,948

The incurred claims development related to prior years reflects favorable claims experience compared to previous estimates. The favorable claims development of $208 million for the three-month period ended March 31, 2022 comprises approximately $114 million from Japan and $94 million from the U.S., representing approximately 55% and 45% of the total, respectively. Excluding the impact of foreign exchange of a loss of approximately $7 million from December 31, 2021 to March 31, 2022, the favorable claims development in Japan would have been approximately $122 million, representing approximately 59% of the total.

The Company has experienced continued favorable claim trends in 2022 for its core health products in Japan. During the first quarter of 2022, 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, dating back to before the pandemic, 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. Even though overall experience is favorable, during the first quarter of 2022, there has been an increase in medical hospitalization claims related to COVID-19, due to the Omicron variant surge in Japan. The Company is monitoring the experience of this benefit, and will additionally adjust claim reserves as needed.

In the first quarter of 2022, as experienced in 2021 and 2020, the incurred claims development related to prior years reflects favorable claims experience compared to previous estimates. The favorable claims trend continued 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. Refinements to COVID-19 incurred estimates also contributed to the favorable development. The U.S. portion of the favorable claims development includes $32 million related to refinements in the estimates for COVID and non-COVID claims as experience emerges.