Losses and Loss Adjustment Expenses

6 Months Ended

Jun. 30, 2015

Note 8 — Losses and Loss Adjustment Expenses

The liability for losses and loss adjustment expenses is determined on an individual case basis for all claims reported. The liability also includes amounts for unallocated expenses, anticipated future claim development and losses incurred, but not reported.

Activity in the liability for unpaid losses and loss adjustment expenses is summarized as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Balance, beginning of period	$	51,177		$	43,597		$	48,908		$	43,686

Incurred related to:
Current period		20,222			18,648			39,054			37,562
Prior period		343			(265	)		550			(614	)

Total incurred		20,565			18,383			39,604			36,948

Paid related to:
Current period		(10,256	)		(12,228	)		(15,052	)		(18,835	)
Prior period		(7,157	)		(6,708	)		(19,131	)		(18,755	)

Total paid		(17,413	)		(18,936	)		(34,183	)		(37,590	)

Balance, end of period	$	54,329		$	43,044		$	54,329		$	43,044

The establishment of loss reserves is an inherently uncertain process and changes in loss reserve estimates are expected as these estimates are subject to the outcome of future events. Changes in estimates, or differences between estimates and amounts ultimately paid, are reflected in the operating results of the period during which such adjustments are made. During the three and six months ended June 30, 2015, the Company experienced unfavorable development of $343 and $550, respectively, with respect to its net unpaid losses and loss adjustment expenses established as of March 31, 2015 and December 31, 2014. Factors attributable to this unfavorable development include an increase in the number of late reported claims.

The Company writes insurance in the state of Florida, which could be exposed to hurricanes or other natural catastrophes. The occurrence of a major catastrophe could have a significant effect on the Company’s monthly or quarterly results and cause a temporary disruption of the normal operations of the Company. The Company is unable to predict the frequency or severity of any such events that may occur in the near term or thereafter.