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,
	2015			2014
Summary of claims and claim adjustment expense reserves
Balance, beginning of year	$	8,321		$	8,734
Less reinsurance recoverable on unpaid losses	839			782
Net balances at beginning of year	7,482			7,952
Net losses:
Provision for claims and claim adjustment expenses for claims arising in current year	30,900			25,385
Estimated claims and claim adjustment expenses for claims arising in prior years	(962		)	846
Total increases	29,938			26,231
Claims and claim adjustment expense payments for claims arising in:
Current year	25,339			22,300
Prior years	3,816			4,401
Total payments	29,155			26,701
Net balance at end of year	8,265			7,482
Plus reinsurance recoverable on unpaid losses	1,380			839
Claims and claim adjustment expense reserves at end of year	$	9,645		$	8,321

The increase in claim and claim adjustment expense reserves is due to an increase in storm activity in the fourth quarter of 2015 compared to 2014.

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, 2015, the Company's estimate of unpaid losses and adjustment expenses for claims incurred in prior years related to catastrophes that exceeded our retention totaled $856,000 before reinsurance ($232,000 in 2014). 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 no case reserves for losses in excess of catastrophe reinsurance upper limits at December 31, 2015 and maintained $99,000 in 2014.