Note 5.

Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses

The roll-forward of liabilities for unpaid losses, claims and loss adjustment expenses for the three months ended March 31, 2020 and 2019 is as follows:

	Three Months Ended March 31,
	2020			2019
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross	$	81,448		$	72,612
Less: Reinsurance recoverable on unpaid losses		(18,339	)		(14,354	)
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, net		63,109			58,258

Incurred related to:
Current accident year		35,985			34,364
Prior accident year development ⁽¹⁾		(2,583	)⁽²⁾		499
Total incurred		33,402			34,863

Paid related to:
Current accident year		14,008			13,707
Prior accident years		20,856			19,877
Total paid		34,864			33,584
Ending liabilities for unpaid losses, claims and loss adjustment expenses, net		61,647			59,537
Plus: Reinsurance recoverable on unpaid losses		18,548			15,176
Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross	$	80,195		$	74,713

⁽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.

⁽²⁾

Prior years’ development was primarily the result of favorable development in the loss and claim reserves for the Medicare supplement line of business in Bankers Fidelity.

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

	Three Months Ended March 31,
	2020			2019
Total incurred losses	$	33,402		$	34,863
Cash surrender value and matured endowments		368			360
Benefit reserve changes		(187	)		84
Total insurance benefits and losses incurred	$	33,583		$	35,307