Note 5.

Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses

The roll-forward of liabilities for unpaid losses, claims and loss adjustment expenses, by major product, is as follows:

Property and Casualty Insurance Products	Three Months Ended March 31,
	2019			2018
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross	$	49,354		$	47,997
Less: Reinsurance recoverable on unpaid losses		(6,428	)		(7,220	)
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, net		42,926			40,777

Incurred related to:
Current accident year		9,398			9,602
Prior accident year development ⁽¹⁾		(355	)		(425	)
Total incurred		9,043			9,177

Paid related to:
Current accident year		1,668			2,348
Prior accident years		7,310			5,976
Total paid		8,978			8,324
Ending liabilities for unpaid losses, claims and loss adjustment expenses, net		42,991			41,630
Plus: Reinsurance recoverable on unpaid losses		6,218			7,158
Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross	$	49,209		$	48,788

⁽¹⁾

In establishing property and casualty reserves, the Company initially reserves for losses at the higher end of the reasonable range if no other value within the range is determined to be more probable. Selection of such an initial loss estimate is an attempt by management to give recognition that initial claims information received generally is not conclusive with respect to legal liability, is generally not comprehensive with respect to magnitude of loss and generally, based on historical experience, will develop more adversely as time passes and more information becomes available. Accordingly, the Company generally experiences reserve redundancies when analyzing the development of prior year losses in a current period.

Medicare Supplement Insurance Products	Three Months Ended March 31,
	2019			2018
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross	$	21,257		$	15,859
Less: Reinsurance recoverable on unpaid losses		(7,926	)		(4,748	)
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, net		13,331			11,111

Incurred related to:
Current accident year		22,472			17,615
Prior accident year development		974			3,343	⁽²⁾
Total incurred		23,446			20,958

Paid related to:
Current accident year		11,125			5,873
Prior accident years		11,213			13,252
Total paid		22,338			19,125
Ending liabilities for unpaid losses, claims and loss adjustment expenses, net		14,439			12,944
Plus: Reinsurance recoverable on unpaid losses		8,958			6,535
Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross	$	23,397		$	19,479

⁽²⁾

The prior accident year development for Medicare supplement insurance products was primarily due to influenza, the usual driver of elevated morbidity in winter, which was significantly higher than in the previous year and ultimately had an unfavorable effect on the Company’s loss patterns.

Other Life and Health Insurance Products	Three Months Ended March 31,
	2019			2018
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross	$	2,001		$	1,833
Less: Reinsurance recoverable on unpaid losses		-			-
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, net		2,001			1,833

Incurred related to:
Current accident year		2,494			2,516
Prior accident year development		(120	)		(284	)
Total incurred		2,374			2,232

Paid related to:
Current accident year		914			998
Prior accident years		1,354			1,214
Total paid		2,268			2,212
Ending liabilities for unpaid losses, claims and loss adjustment expenses, net		2,107			1,853
Plus: Reinsurance recoverable on unpaid losses		-			-
Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross	$	2,107		$	1,853

Following is a reconciliation of total incurred losses to total insurance benefits and losses incurred:

	Three Months Ended March 31,
	2019		2018
Total incurred losses	$	34,863	$	32,367
Cash surrender value and matured endowments		360		378
Benefit reserve changes		84		427
Total insurance benefits and losses incurred	$	35,307	$	33,172