POLICY AND CLAIM RESERVES

9 Months Ended

Sep. 30, 2020

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 reserve 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:


($ in thousands)	Nine months ended September 30,
		2020		2019
Summary of claims and claim adjustment expense reserves
Balance, beginning of year		$	7,199	$	8,208
Less reinsurance recoverable on unpaid losses		249		1,384
Net balances at beginning of year		6,950		6,824
Net losses:
Provision for claims and claim adjustment expenses for claims arising in current year		38,477		27,126
Estimated claims and claim adjustment expenses for claims arising in prior years		(1,214)		(1,014)
Total increases		37,263		26,112
Claims and claim adjustment expense payments for claims arising in:
Current year		31,637		22,694
Prior years		4,531		3,496
Total payments		36,168		26,190
Net balance at end of period		8,045		6,746
Plus reinsurance recoverable on unpaid losses		2,778		211
Claims and claim adjustment expense reserves at end of period		$	10,823	$	6,957

Claims and claim adjustment expense reserves before reinsurance recoverable at September 30, 2020 were up compared to the same period last year due to an increase in spring storm activity in the second quarter of 2020 and two hurricanes in the third quarter of 2020. Hurricane losses during the third quarter were the primary factors contributing to the increase in end of period claims and claim adjustment expense reserves September 30, 2020 compared to September 30, 2019. The estimate for claims arising in prior years was reduced $1,214,000 in 2020 (reduced $1,014,000 in 2019) 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 $441,000 at September 30, 2020 ($417,000 at December 31, 2019). These claims are a component of policy and contract claims which totaled $1,135,000 at September 30, 2020 ($1,053,000 at December 31, 2019).