6. Liability for Unpaid Losses and Loss Adjustment Expenses

Set forth in the following table is the change in liability for unpaid losses and LAE for the periods presented (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Balance at beginning of period	$	151,916		$	22,645		$	248,425		$	58,494
Less: Reinsurance recoverable (net of payable offsets)		(96,733	)		(1,393	)		(182,405	)		(106	)
Net balance at beginning of period		55,183			21,252			66,020			58,388
Incurred (recovered) related to:
Current year		85,986			116,262			249,488			265,811
Prior years		(39	)		113			2,227			1,318
Total incurred		85,947			116,375			251,715			267,129
Paid related to:
Current year		72,034			93,969			140,013			179,000
Prior years		38,372			15,912			146,998			118,771
Total paid		110,406			109,881			287,011			297,771
Net balance at end of period		30,724			27,746			30,724			27,746
Plus: Reinsurance recoverable (net of payable offsets)		127,943			412,697			127,943			412,697
Balance at end of period	$	158,667		$	440,443		$	158,667		$	440,443

During the third quarter of 2018, the Company recorded prior year adverse development to increase its estimate of ultimate losses for the third quarter 2017 storm, Hurricane Irma, to $754.0 million from $446.7 million recorded as of 2017 year-end. The prior year adverse development of $311.7 million in direct losses resulted in net losses of $2.2 million after the benefit of reinsurance recoveries, including those related to Hurricane Irma. The increase in the ultimate loss and LAE from Hurricane Irma was the result of a continuation of new reported claims and litigation costs associated with the aggressive nature of plaintiff attorneys on claims in Florida.

The nine months ended September 30, 2017 included prior year loss reserve development of $6.9 million on a direct basis ($1.3 million on a net basis), primarily reflecting strengthening of reserves for the fourth quarter 2016 storm, Hurricane Matthew.