Losses and Loss Adjustment Expenses

9 Months Ended

Sep. 30, 2016

Note 11 — 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						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Balance, beginning of period	$	54,727		$	54,329		$	51,690		$	48,908

Incurred related to:
Current period		21,283			24,419			68,703			63,473
Prior period		4,626			1,781			10,558			2,331

Total incurred		25,909			26,200			79,261			65,804

Paid related to:
Current period		(16,078	)		(16,059	)		(38,674	)		(31,111	)
Prior period		(7,363	)		(7,253	)		(35,082	)		(26,384	)

Total paid		(23,441	)		(23,312	)		(73,756	)		(57,495	)

Balance, end of period	$	57,195		$	57,217		$	57,195		$	57,217

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 estimates are adjusted. During the three and nine months ended September 30, 2016, the Company experienced unfavorable development of $4,626 and $10,558, respectively, attributable to the settlement and further development of older claims and an increase in late reported claims, primarily claims related to the 2015 loss year.

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 quarterly results and cause a temporary disruption of the normal operations of the Company. However, the Company is unable to predict the frequency or severity of any such events that may occur in the near term or thereafter.