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, 2021 and 2020 is as follows:

	Three Months Ended March 31,
	2021			2020
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross	$	79,147		$	81,448
Less: Reinsurance recoverable on unpaid losses		(17,600	)		(18,339	)
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, net		61,547			63,109

Incurred related to:
Current accident year		32,928			35,985

Prior accident year development ⁽¹⁾		475	⁽²⁾		(2,583	)⁽³⁾
Total incurred		33,403			33,402

Paid related to:
Current accident year		10,917			14,008
Prior accident years		20,984			20,856
Total paid		31,901			34,864
Ending liabilities for unpaid losses, claims and loss adjustment expenses, net		63,049			61,647
Plus: Reinsurance recoverable on unpaid losses		18,236			18,548
Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross	$	81,285		$	80,195

(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 unfavorable development in the loss and claim reserves for the Medicare supplement line of business in Bankers Fidelity. Partially offsetting the unfavorable development was favorable development in the property and casualty operations.

(3)	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. Rate increases on existing business and the resultant improvement in rate adequacy was more favorable than expected.

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

	Three Months Ended March 31,
	2021			2020
Total incurred losses	$	33,403		$	33,402
Cash surrender value and matured endowments		247			368
Benefit reserve changes		(378	)		(187	)
Total insurance benefits and losses incurred	$	33,272		$	33,583