6. INSURANCE CLAIM RESERVES

Claims and claim adjustment expense reserves were as follows:

(in millions)	June 30, 2017		December 31, 2016
Property-casualty	$	48,556	$	47,929
Accident and health	18		20
Total	$	48,574	$	47,949

The following table presents a reconciliation of beginning and ending property casualty reserve balances for claims and claim adjustment expenses for the six months ended June 30, 2017 and 2016:

(for the six months ended June 30, in millions)	2017			2016

Claims and claim adjustment expense reserves at beginning of year	$	47,929		$	48,272
Less reinsurance recoverables on unpaid losses	7,981			8,449
Net reserves at beginning of year	39,948			39,823

Estimated claims and claim adjustment expenses for claims arising in the current year	8,493			7,859
Estimated increase (decrease) in claims and claim adjustment expenses for claims arising in prior years	(214		)	(418		)
Total increases	8,279			7,441

Claims and claim adjustment expense payments for claims arising in:
Current year	2,699			2,454
Prior years	4,966			5,004
Total payments	7,665			7,458
Unrealized foreign exchange loss	117			36

Net reserves at end of period	40,679			39,842
Plus reinsurance recoverables on unpaid losses	7,877			8,089
Claims and claim adjustment expense reserves at end of period	$	48,556		$	47,931

Gross claims and claim adjustment expense reserves at June 30, 2017 increased by $627 million from December 31, 2016, primarily reflecting the impacts of (i) higher volumes of insured exposures and loss cost trends for the current accident year and (ii) catastrophe losses incurred in the first six months of 2017, partially offset by the impacts of (iii) payments related to operations in runoff and (iv) net favorable prior year reserve development.

Reinsurance recoverables on unpaid losses at June 30, 2017 decreased by $104 million from December 31, 2016, primarily reflecting the impact of cash collections in the first six months of 2017, including the settlement of certain disputes as discussed in more detail in note 13.

Prior Year Reserve Development

The following disclosures regarding reserve development are on a “net of reinsurance” basis.

For the six months ended June 30, 2017 and 2016, estimated claims and claim adjustment expenses incurred included $214 million and $418 million, respectively, of net favorable development for claims arising in prior years, including $284 million and $468 million, respectively, of net favorable prior year reserve development impacting the Company’s results of operations and $25 million of accretion of discount in each period.

Business Insurance. Net favorable prior year reserve development in the second quarter of 2017 totaled $125 million, primarily driven by better than expected loss experience in the segment’s domestic operations in (i) the workers’ compensation product line for multiple accident years, (ii) the commercial multi-peril product line for liability coverages for multiple accident years and (iii) the general liability product line for both primary and excess coverages for multiple accident years (excluding an increase to environmental reserves discussed below). Net favorable prior year reserve development in the second quarter of 2016 totaled $125 million, primarily driven by better than expected loss experience in the segment’s domestic operations in (i) the workers’ compensation product line for accident years 2006 and prior as well as accident year 2015 and (ii) the general liability product line for both primary and excess coverages for accident years 2011 and 2015 (excluding an increase to environmental reserves discussed below), as well as in the segment’s international operations in Europe. These factors contributing to net favorable prior year reserve development in the second quarters of 2017 and 2016 were partially offset by $65 million and $82 million increases, respectively, to environmental reserves.

Net favorable prior year reserve development in the first six months of 2017 totaled $186 million, primarily driven by better than expected loss experience in the segment’s domestic operations in (i) the workers’ compensation product line for multiple accident years, (ii) the general liability product line (excluding the increase to environmental reserves) for both primary and excess coverages for multiple accident years and (iii) the commercial multi-peril product line for liability coverages for multiple accident years, partially offset by (iv) net unfavorable prior year reserve development in the segment’s international operations in Europe due to the U.K. Ministry of Justice’s “Ogden” discount rate adjustment applied to lump sum bodily injury payouts. Net favorable development in the first six months of 2016 totaled $199 million, primarily driven by better than expected loss experience in the segment’s domestic operations in (i) the workers’ compensation product line for accident years 2006 and prior as well as accident year 2015, (ii) the general liability product line (excluding the increase to environmental reserves), related to both primary and excess coverages for accident years 2011, 2013 and 2015 and (iii) the commercial automobile product line for accident years 2010 and prior, as well as in the segment’s international operations in Europe and Canada. These factors contributing to net favorable prior year reserve development in the first six months of 2017 and 2016 were partially offset by the $65 million and $82 million increases, respectively, to environmental reserves.

Bond & Specialty Insurance. Net favorable prior year reserve development in the second quarter and first six months of 2017 totaled $78 million and $92 million, respectively, primarily driven by better than expected loss experience in the segment’s domestic operations in the general liability product line for accident years 2012 through 2015. Net favorable prior year reserve development in the second quarter of 2016 totaled $159 million, primarily driven by better than expected loss experience in the segment’s domestic operations in (i) the fidelity and surety product line for accident years 2010, 2013 and 2014 and (ii) the general liability product line for accident years 2007 through 2011. Net favorable prior year reserve development in the first six months of 2016 totaled $225 million, primarily driven by better than expected loss experience in the segment’s domestic operations in (i) the fidelity and surety product line for accident years 2010 through 2014 and (ii) the general liability product line for accident years 2007 through 2011.

Personal Insurance. Net favorable prior year reserve development in the second quarter and first six months of 2017 totaled $0 and $6 million, respectively. Net favorable prior year reserve development in the second quarter and first six months of 2016 totaled $4 million and $44 million, respectively. Net favorable prior year reserve development in the first six months of 2016 was primarily driven by better than expected loss experience in the segment’s domestic operations in (i) the Homeowners and Other product line for liability coverages for accident year 2014 and (ii) the Automobile product line for accident year 2014, as well as in the segment’s international operations in Canada.