Policy and Claim Reserves

12 Months Ended

Dec. 31, 2011

Liability for Claims and Claims Adjustment Expense [Abstract]

Liability for Future Policy Benefits and Unpaid Claims Disclosure [Text Block]

POLICY AND CLAIM RESERVES

The Company regularly updates its reserve estimates as new information becomes available and events occur that may impact the resolution of unsettled claims. Changes in prior years' reserve estimates are reflected in the results of operations in the year such changes are determined.

The following table is a reconciliation of beginning and ending property and casualty reserve balances for claims and claim adjustment expense (dollars in thousands):

	Year ended December 31,
	2011		2010
Claims and claim adjustment expense reserves at beginning of year	$	13,184	$	12,646
Less reinsurance recoverables on unpaid losses	1,329		549
Net balances at beginning of year	11,855		12,097
Provision for claims and claim adjustment expenses for claims arising in current year	39,292		37,161
Estimated claims and claim adjustment expenses for claims arising in prior years	59		(2,830		)
Total increases	39,351		34,331
Claims and claim adjustment expense payments for claims arising in:
Current year	33,012		28,625
Prior years	6,189		5,948
Total payments	39,201		34,573
Net balance at end of year	12,005		11,855
Plus reinsurance recoverables on unpaid losses	2,381		1,329
Claims and claim adjustment expense reserves at end of year	$	14,386	$	13,184

The 2011 increase in the provision for claims and claim adjustment expenses arising from claims in the current year and the ending reinsurance recoverable on unpaid losses are attributable to the increase in claim activity related to spring storm losses including the tornado catastrophe in late April as well as an increase in claims related to the automobile program.

The Company has a geographic exposure to catastrophe losses in certain areas of the country. Catastrophes can be caused by various events including hurricanes, windstorms, earthquakes, hail, severe winter weather, explosions and fires, and the incidence and severity of catastrophes are inherently unpredictable. The extent of losses from a catastrophe is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. Most catastrophe losses are restricted to small geographic areas; however, hurricanes and earthquakes may produce significant damage in large, heavily populated areas. The Company generally seeks to reduce its exposure to catastrophes through individual risk selection and the purchase of catastrophe reinsurance. At December 31, 2011, the Company's estimate of unpaid losses and adjustment expenses for hurricane related claims incurred in prior years totaled $1,793,000 before reinsurance ($1,320,000 in 2010). The increase in unpaid losses and adjustment expenses for hurricane related claims incurred in prior years is related to adverse development from Hurricane Ike. Because the Company has exhausted its catastrophe coverage limits available for Hurricane Katrina any additional development will not be covered by reinsurance. The Company maintains case reserves of $266,000 for losses in excess of catastrophe reinsurance ($254,000 in 2010).