Reserves For Claims

12 Months Ended

Dec. 31, 2011

Reserves For Claims [Abstract]

Reserves For Claims

6. Reserves for Claims

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

		2011			2010
Balance, beginning of year	$	38,198,700		$	39,490,000
Provisions related to:
Current year		6,845,338			6,744,917
Prior years		(3,502,911	)		(2,309,851	)
Total provision charged to operations		3,342,427			4,435,066
Claims paid, net of recoveries, related to:
Current year		(305,079	)		(303,800	)
Prior years		(3,240,048	)		(5,422,566	)
Total claims paid, net of recoveries		(3,545,127	)		(5,726,366	)
Balance, end of year	$	37,996,000		$	38,198,700

     The Company continually refines its reserve estimates as current loss experience develops and credible data emerges. Movements in the reserves related to prior periods were primarily the result of claim recoveries, as well as changes to estimates to better reflect the latest reported loss data. The Company does not recognize claim recoveries until an actual payment has been received by the Company. During 2011, the Company realized claim recoveries of approximately $1,488,000. During 2010, the Company realized claim recoveries of approximately $3,100,000.

     The provision for claims as a percentage of net premiums written was 4.1% and 7.2% in 2011 and 2010, respectively. The change in estimate for calendar year 2011 from 2010 resulted mostly from favorable development in 2011 versus prior year related primarily to policy years 2007 through 2010. Due to variances between actual and expected loss payments, loss development is subject to significant variability.

     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 reserves, broken down into its components of known title claims and IBNR claims follows:

		2011	Percentage			2010	Percentage
Known title claims	$	6,233,501	16.4	%	$	6,121,941	16.0	%
IBNR		31,762,499	83.6	%		32,076,759	84.0	%
Total loss reserves	$	37,996,000	100.0	%	$	38,198,700	100.0	%

In management's opinion, the reserves are adequate to cover claim losses which might result from pending and future claims.