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. Reserve estimation can be an inherently uncertain process and reserves estimates can be revised up or down depending on changes in circumstances. 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):



	Nine months ended September 30,
	2017			2016
Summary of claims and claim adjustment expense reserves
Balance, beginning of year	$	7,531		$	9,645
Less reinsurance recoverable on unpaid losses	1,184			1,380
Net balances at beginning of year	6,347			8,265
Net losses:
Provision for claims and claim adjustment expenses for claims arising in current year	32,867			25,987
Estimated claims and claim adjustment expenses for claims arising in prior years	(1,355		)	(1,673		)
Total increases	31,512			24,314
Claims and claim adjustment expense payments for claims arising in:
Current year	26,275			20,923
Prior years	3,041			4,650
Total payments	29,316			25,573
Net balance at end of period	8,543			7,006
Plus reinsurance recoverable on unpaid losses	354			427
Claims and claim adjustment expense reserves at end of period	$	8,897		$	7,433

The increase in claim and claim adjustment expense reserves before reinsurance recoverable is primarily due to the increase in catastrophe losses during the period. The estimate for claims arising in prior years was reduced $1,355,000 in 2017 (reduced $1,673,000 in 2016) due to favorable loss development during the year on claims arising in prior years.

Accident and Health Claim Reserves

The Company, through its life insurance subsidiary, underwrites a limited number of short duration accident and health contracts. These claims are typically settled in three years or less and the reserve for unpaid claims totaled $365,000 at September 30, 2017 ($391,000 at December 31, 2016). These claims are a component of policy and contract claims which totaled $923,000 at September 30, 2017 ($1,008,000 at December 31, 2016).