Reserves for Claims

12 Months Ended

Dec. 31, 2020

Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract]

Reserves for Claims

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:

(in thousands)	2020		2019
Balance, beginning of period	$	31,333	$	31,729
Provision related to:
Current year	8,877		8,610
Prior years	(3,673)		(5,078)
Total provision charged to operations	5,204		3,532
Claims paid, net of recoveries, related to:
Current year	(249)		(2,057)
Prior years	(2,704)		(1,871)
Total claims paid, net of recoveries	(2,953)		(3,928)
Balance, end of year	$	33,584	$	31,333

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 increase in the provision for claims in 2020, compared to 2019, primarily related to higher premium levels in the current year period. 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 $308 thousand and $815 thousand during 2020 and 2019, respectively.

The provision for claims as a percentage of net premiums written was 2.5% and 2.4% in 2020 and 2019, respectively.

A large claim is defined as a claim with incurred losses exceeding $500 thousand. 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 reserve for claims, broken down into its components of known title claims and IBNR, follows:

(in thousands, except percentages)	2020		%	2019		%
Known title claims	$	3,585	10.7	$	3,799	12.1
IBNR	29,999		89.3	27,534		87.9
Total reserve for claims	$	33,584	100.0	$	31,333	100.0

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