POLICY LIABILITIES

9 Months Ended

Sep. 30, 2022

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


	Three Months Ended September 30,					Nine Months Ended September 30,
(In millions)		2022		2021			2022		2021
Unpaid supplemental health claims, beginning of period		$	3,779	$	4,162		$	4,067	$	4,389
Less reinsurance recoverables		38		37			37		39
Net balance, beginning of period		3,741		4,125			4,030		4,350
Add claims incurred during the period related to:
Current year		1,689		1,720			5,007		5,302
Prior years		(151)		(215)			(512)		(739)
Total incurred		1,538		1,505			4,495		4,563
Less claims paid during the period on claims incurred during:
Current year		1,148		1,279			2,703		2,947
Prior years		214		219			1,554		1,676
Total paid		1,362		1,498			4,257		4,623
Effect of foreign exchange rate changes on unpaid claims		(105)		(29)			(456)		(187)
Net balance, end of period		3,812		4,103			3,812		4,103
Add reinsurance recoverables		50		39			50		39
Unpaid supplemental health claims, end of period		3,862		4,142			3,862		4,142
Unpaid life claims, end of period		654		767			654		767
Total liability for unpaid policy claims		$	4,516	$	4,909		$	4,516	$	4,909

The incurred claims development related to prior years reflects favorable claims experience compared to previous estimates. The favorable claims development of $512 million for the nine-month period ended September 30, 2022 comprises approximately $321 million from Japan and $191 million from the U.S., representing approximately 63% and 37% of the total, respectively. Excluding the impact of foreign exchange of a loss of approximately $83 million from December 31, 2021 to September 30, 2022, the favorable claims development in Japan would have been approximately $404 million, representing approximately 79% of the total.

The Company has experienced continued favorable claim trends in 2022 for its core health products in Japan. During the first nine months 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. Although overall experience is favorable, during the first nine months of 2022, there has been an increase in medical hospitalization claims related to COVID-19, mainly due to a wider scope of "deemed hospitalization" being utilized in Japan. 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.

In the first nine months 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. Additionally, refinements to COVID-19 incurred estimates also contributed to the favorable development. The U.S. portion of the favorable claims development in the first nine months of 2022 includes $63 million related to refinements in the estimates for COVID-19 and non-COVID-19 claims as experience emerges.