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Liability for Unpaid Losses and Loss Adjustment Expenses
 6 Months Ended
Jun. 30, 2024
Insurance [Abstract]  
Liability for Unpaid Losses and Loss Adjustment Expenses 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
June 30,		Six Months Ended
June 30,
 2024202320242023
Balance at beginning of period$429,629 $870,407 $510,117 $1,038,790 
Less: Reinsurance recoverable (101,036)(669,946)(183,435)(798,680)
Net balance at beginning of period328,593 200,461 326,682 240,110 
Incurred related to:  
Current year243,572 209,902 483,759 412,738 
Prior years— 13,825 — 17,143 
Total incurred243,572 223,727 483,759 429,881 
Paid related to:  
Current year151,587 123,258 247,921 191,041 
Prior years109,051 133,161 250,993 311,181 
Total paid260,638 256,419 498,914 502,222 
Net balance at end of period311,527 167,769 311,527 167,769 
Plus: Reinsurance recoverable 33,121 495,250 33,121 495,250 
Balance at end of period$344,648 $663,019 $344,648 $663,019 
During the six months ended June 30, 2024, the liability for unpaid losses and loss adjustment expenses, prior to reinsurance, decreased by $165.5 million from $510.1 million as of December 31, 2023 to $344.6 million as of June 30, 2024. The decrease was principally the result of the settlement of Hurricane Ian claims, claims from other prior hurricanes and claims arising in the current and prior accident years.
Prior year development includes changes in previous estimates for unpaid Losses and LAE for all events occurring in prior years including hurricanes, other weather, and non-weather claims affected by pre-reform market conditions in Florida, and in 2023 also included changes in prior estimates resulting from the evaluation of claims in anticipation of the commutation of Hurricane Irma losses with the FHCF. In recent years, the Company has strengthened reserves as a result of adverse development on claims related to Florida homeowners, tenants and condo owners coverages arising from non-weather and weather events. Similar to other carriers operating in the Florida homeowners marketplace, the Company has experienced deterioration in non-weather claims, such as roof claims and other water damage claims, and hurricane claims due to an unfavorable claims environment characterized by increases in policyholder demands and significant attorney representation. In 2023, adverse development was due to represented and litigated claims, and Florida weather claims for accident years 2017 and later. One of management’s objectives in 2023 and continuing into 2024 is to strengthen reserves on those prior period claims, which do not benefit from legislation signed in late 2022 that eliminated the one-way attorneys’ fee statute and assignments of benefits, established a one-year post-loss reporting period and made other reforms intended to improve the Florida market.
Losses and LAE experience over the past several years including both the six months ended June 30, 2024 and twelve months ended December 31, 2023, reflects an adverse litigation environment and other market conditions in Florida that the Florida Legislature has been attempting to address with the passage of legislation spanning several years. The most significant changes were made during a special session held in December 2022. Although the market remains early in the implementation phase of the new laws and their ultimate effects will not be known for some time, the Company considered and included the anticipated effects of the enacted legislation on post-reform claims in developing its ultimate loss projections and reserve estimates as of June 30, 2024.
In addition to the actions taken by the Florida Legislature, management has been taking actions to improve losses and LAE experience through several means including operational initiatives designed to improve the efficiency and effectiveness of the claims cycle and reduce the impact of litigation; implementing pricing adjustments to reflect the loss experience as well as inflation and the increasing cost of reinsurance; reducing exposures that disproportionately contribute to elevated claims costs and expenses; and securing efficient reinsurance programs to protect against catastrophes.
During the three months ended June 30, 2024, there was adverse prior years’ gross reserve development of $10.0 million, and no unfavorable development net of that ceded. During the three months ended June 30, 2023, there was adverse prior years’ reserve development of $43.1 million gross less $29.4 million ceded resulting in $13.8 million net unfavorable development. The direct and net prior years’ reserve development for the quarter ended June 30, 2023 was principally due to gross reserve development for Hurricane Sally.