Reserve for Claims

Changes in the reserve for claims for the years ended December 31 are summarized as follows based on the year in which the policies were written:



	2017			2016			2015
Balance, beginning of period	$	35,305,000		$	37,788,000		$	36,677,000
Provision (benefit) related to:
Current year	7,431,586			6,673,036			7,295,013
Prior years	(4,120,506		)	(6,430,083		)	(2,816,519		)
Total provision charged to operations	3,311,080			242,953			4,478,494
Claims paid, net of recoveries, related to:
Current year	(74,885		)	(102,501		)	(97,116		)
Prior years	(3,740,195		)	(2,623,452		)	(3,270,378		)
Total claims paid, net of recoveries	(3,815,080		)	(2,725,953		)	(3,367,494		)
Balance, end of year	$	34,801,000		$	35,305,000		$	37,788,000

The Company continually refines its reserve estimates as current loss experience develops and credible data emerges. Movements in the reserve related to prior periods were primarily the result of changes to estimates to better reflect the latest reported loss data. The 2017 increase in the provision for claims compared with 2016 primarily related to higher levels of favorable loss development in 2016. The 2016 calendar year change in the provision relating to prior years resulted mostly from changes to certain actuarial inputs and favorable development in 2016 versus the prior year related primarily to policy years 2009 through 2015. Due to variances between actual and expected loss payments, loss development is subject to significant variability.

The Company does not recognize claim recoveries until an actual payment has been received by the Company. The Company realized claim recoveries of approximately $570,000, $1,040,000 and $467,000 during 2017, 2016 and 2015, respectively.

The provision for claims as a percentage of net premiums written was 2.4%, 0.2% and 4.0% in 2017, 2016 and 2015, respectively.

A large claim is defined as a claim with incurred losses exceeding $250,000. Due to the small volume of large claims, the long-tail nature of title insurance claims and the inherent uncertainty in loss emergence patterns, large claim activity can vary significantly between policy years. The estimated development of large claims by policy year is therefore subject to significant changes as experience develops.

A summary of the Company’s loss reserve, broken down into its components of known title claims and IBNR, follows:



	2017		%	2016		%
Known title claims	$	4,646,422	13.4	$	4,405,343	12.5
IBNR	30,154,578		86.6	30,899,657		87.5
Total loss reserve	$	34,801,000	100.0	$	35,305,000	100.0

In management’s opinion, the reserve is adequate to cover claim losses which might result from pending and future claims.