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Reserve for Loss and Loss Expense | 9 Months Ended
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Sep. 30, 2020
Insurance Loss Reserves [Abstract] |
Reserve for Loss and Loss Expense | Reserve for Loss and Loss Expense The table below provides a roll forward of reserve for loss and loss expense balances:
|  | Nine Months ended September 30,
($ in thousands) |  | 2020 |  | 2019
Gross reserve for loss and loss expense, at beginning of year |  | $ | 4,067,163 |  |  | 3,893,868 |
Less: reinsurance recoverable on unpaid loss and loss expense, at beginning of year 1 |  | 547,066 |  |  | 537,388 |
Net reserve for loss and loss expense, at beginning of year |  | 3,520,097 |  |  | 3,356,480 |
Incurred loss and loss expense for claims occurring in the: |  |  |  |
Current year |  | 1,295,285 |  |  | 1,200,878 |
Prior years |  | (43,210) |  |  | (34,640) |
Total incurred loss and loss expense |  | 1,252,075 |  |  | 1,166,238 |
Paid loss and loss expense for claims occurring in the: |  |  |  |
Current year |  | 421,981 |  |  | 384,436 |
Prior years |  | 646,974 |  |  | 631,589 |
Total paid loss and loss expense |  | 1,068,955 |  |  | 1,016,025 |
Net reserve for loss and loss expense, at end of period |  | 3,703,217 |  |  | 3,506,693 |
Add: Reinsurance recoverable on unpaid loss and loss expense, at end of period |  | 590,059 |  |  | 548,938 |
Gross reserve for loss and loss expense at end of period |  | $ | 4,293,276 |  |  | 4,055,631 |
1 Includes an adjustment of $2.9 million related to our adoption of ASU 2016-13. Refer to Note 2. "Adoption of Accounting Pronouncements" for additional information. Our current year incurred losses of $1,295.3 million were impacted by catastrophe losses that were $195.9 million in Nine Months 2020, compared to $74.5 million in Nine Months 2019. In addition, the current year incurred losses include ultimate net losses of $10.0 million for COVID-19-related losses related to a small portion of our policies that provide a $25,000 sub-limited coverage for specified extra expenses to clean or disinfect a property when ordered by a Board of Health. As of September 30, 2020, we have not incurred losses related to this exposure and the $10.0 million in ultimate net losses remains all IBNR. In most instances COVID-19 does not cause a direct physical loss to property, so we do not expect material business interruption losses from COVID-19 given the terms, conditions, and exclusions of our policies. Our practice has been to include or attach to all standard lines commercial property and businessowners policies an exclusion that states that all loss or property damage caused by or resulting from any virus, bacterium, or other microorganism that induces or is capable of inducing physical distress, illness, or disease is not a covered cause of loss. Prior year reserve development in Nine Months 2020 was favorable by $43.2 million, which included $50.0 million of casualty reserve development that was partially offset by $6.8 million of unfavorable property reserve development. The favorable casualty reserve development included $40.0 million of development in our workers compensation lines of business and $20.0 million in our general liability line of business, partially offset by $10.0 million of unfavorable reserve development in our commercial automobile line of business. Prior year reserve development in Nine Months 2019 was favorable by $34.6 million, which was driven by casualty reserve development of $41.0 million that was partially offset by $6.4 million of unfavorable property reserve development. The favorable casualty reserve development included $33.0 million in our workers compensation line of business and $10.0 million in our general liability line of business that was partially offset by $2.0 million of unfavorable reserve development in our personal automobile line of business.

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