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Workers' Compensation Claims | 6 Months Ended
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Jun. 30, 2017
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Workers' Compensation Claims | Note 3 – Workers’ Compensation Claims The following table summarizes the aggregate workers’ compensation reserve activity (in thousands):
|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Beginning balance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Workers' compensation claims liabilities |  | $ | 326,233 |  |  | $ | 265,142 |  |  | $ | 312,537 |  |  | $ | 255,675 |
Add: claims expense accrual |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period |  |  | 37,878 |  |  |  | 34,627 |  |  |  | 73,153 |  |  |  | 65,781 |
Prior periods |  |  | 2,350 |  |  |  | (1,396 | ) |  |  | 5,264 |  |  |  | (548 | )
|  |  | 40,228 |  |  |  | 33,231 |  |  |  | 78,417 |  |  |  | 65,233 |
Less: claim payments related to |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period |  |  | 4,148 |  |  |  | 3,698 |  |  |  | 5,280 |  |  |  | 4,969 |
Prior periods |  |  | 25,998 |  |  |  | 17,625 |  |  |  | 49,462 |  |  |  | 38,889 |
|  |  | 30,146 |  |  |  | 21,323 |  |  |  | 54,742 |  |  |  | 43,858 |
Add: Change in claims incurred in excess of retention limits |  |  | (6,236 | ) |  |  | — |  |  |  | (6,133 | ) |  |  | — |
Ending balance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Workers' compensation claims liabilities |  | $ | 330,079 |  |  | $ | 277,050 |  |  | $ | 330,079 |  |  | $ | 277,050 |
Incurred but not reported (IBNR) |  | $ | 167,693 |  |  | $ | 140,115 |  |  | $ | 167,693 |  |  | $ | 140,115 |
The Company is a self-insured employer with respect to workers' compensation coverage for all of its employees (including employees co-employed through our client service agreements) working in Colorado, Maryland and Oregon, except as described below. In the state of Washington, state law allows only the Company's staffing services and internal management employees to be covered under the Company's self-insured workers' compensation program. Effective January 1, 2015, the Company stopped maintaining a certificate to self-insure in the state of California, and it now obtains individual policies from Chubb Limited (“Chubb”) for all California-based clients along with clients in Delaware, Virginia, Pennsylvania, North Carolina, New Jersey, West Virginia and the District of Columbia. The arrangement with Chubb, known as a fronted program, provides BBSI a licensed, admitted insurance carrier to issue policies on behalf of BBSI. The risk of loss up to the first $5.0 million per occurrence is retained by BBSI through a reinsurance agreement. Chubb assumes credit risk should BBSI be unable to satisfy its indemnification obligations. As part of its fronted workers’ compensation insurance program with Chubb, the Company makes monthly payments into a trust account (“the Chubb trust account”) to be used for the payment of future claims. The balance in the Chubb trust account was $327.9 million and $277.1 million at June 30, 2017 and December 31, 2016, respectively. The Chubb trust account balances are included as a component of the current and long-term restricted cash and investments in the Company’s condensed consolidated balance sheets. The states of California, Maryland, Oregon, Washington, Colorado and Delaware required us to maintain specified investment balances or other financial instruments totaling $97.0 million and $135.0 million at June 30, 2017 and December 31, 2016, respectively, to cover potential workers’ compensation claims losses related to the Company’s current and former status as a self-insured employer. In addition to restricted cash and investments held to satisfy these requirements, at June 30, 2017, the Company has provided surety bonds and standby letters of credit totaling $90.8 million, including a California requirement of $84.8 million. The Company provided a total of $330.1 million and $312.5 million at June 30, 2017 and December 31, 2016, respectively, as an estimated future liability for unsettled workers' compensation claims liabilities. Of this amount, $3.0 million and $9.1 million at June 30, 2017 and December 31, 2016, respectively, represents case reserves incurred in excess of the Company’s retention. The accrual for costs incurred in excess of retention limits is offset by a receivable from excess insurance carriers of $3.0 million and $9.1 million at June 30, 2017 and December 31, 2016, respectively, included in other assets in the condensed consolidated balance sheets.

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