| Reserves for Unpaid Losses and Loss Adjustment Expenses |
7. Reserves for Unpaid Losses and Loss Adjustment Expenses Year to-date activity in the consolidated reserves for unpaid losses and LAE is summarized as follows (in thousands): | | | | | | | | | | September 30, | | September 30, | | | | 2022 | | 2021 | | Balance at January 1 | | $ | 816,681 | | $ | 789,768 | | Less reinsurance recoverable | | | 387,915 | | | 357,200 | | Net balance at January 1 | | | 428,766 | | | 432,568 | | | | | | | | | | Incurred related to: | | | | | | | | Current year | | | 168,164 | | | 207,121 | | Prior years | | | 88,178 | | | 2,553 | | Total incurred | | | 256,342 | | | 209,674 | | | | | | | | | | Paid related to: | | | | | | | | Current year | | | 13,740 | | | 64,292 | | Prior years | | | 186,868 | | | 130,623 | | Total paid | | | 200,608 | | | 194,915 | | | | | | | | | | Net balance at September 30 | | | 484,500 | | | 447,327 | | Plus reinsurance recoverable | | | 374,388 | | | 368,054 | | Balance at September 30 | | $ | 858,888 | | $ | 815,381 | |
The year to date impact from the unfavorable (favorable) net prior years’ loss development on each reporting segment and discontinued operations is presented below: | | | | | | | | | September 30, | | | 2022 | | 2021 | Standard Commercial Segment | | $ | 250 | | $ | (2,371) | Personal Segment | | | 5,218 | | | 4,356 | Runoff Segment | | | 70,365 | | | (6,543) | Unfavorable (favorable) net prior year development from continuing operations | | $ | 75,833 | | $ | (4,558) | Unfavorable net prior year development from discontinued operations | | | 12,345 | | | 7,111 | Total unfavorable net prior year development | | $ | 88,178 | | $ | 2,553 |
The following describes the primary factors behind each segment’s prior accident year reserve development for the nine months ended September 30, 2022 and 2021: Nine months ended September 30, 2022: | ● | Standard Commercial Segment. Our Commercial Accounts business unit experienced net unfavorable development in the general liability line of business in all accident years, partially offset by net favorable development in the property and commercial auto liability lines of business primarily in accident years 2021, 2020 and 2019. Our Aviation business unit experienced net favorable development in the 2021 accident year, partially offset by net unfavorable development in the 2020 and 2019 accident years. The run-off from our former Workers Compensation operating unit experienced net unfavorable development in the 2015 and prior accident years. |
| ● | Personal Segment. Net unfavorable development in our Specialty Personal Lines business unit was driven predominately by unfavorable development attributable to the 2021 and 2020 accident years due in part to rising inflationary trends, specifically loss costs, that the industry began experiencing in 2021. |
| ● | Runoff Segment. Our binding commercial automobile liability line of business experienced net unfavorable development in the 2020 and prior accident years due in part to exceeding the aggregate limit of the loss portfolio transfer agreement covering accident years 2019 and prior entered into during 2020 We experienced net unfavorable development in our senior care facilities and satellite launch business, as well a commercial automobile liability program. |
Nine months ended September 30, 2021: | ● | Standard Commercial Segment. Our Commercial Accounts business unit experienced net favorable development for all lines of business in total, primarily due to net favorable development in our commercial auto liability and property lines of business in accident years 2020, 2016 and 2015, partially offset by net unfavorable development in the general liability lines of business in accident years 2019, 2018, 2017 and 2014 and prior accident years. We experienced net unfavorable development in our Aviation business unit. The run-off from our former Workers Compensation operating unit experienced net favorable development in the 2015 and prior accident years. |
| ● | Personal Segment. Net unfavorable development in our Specialty Personal Lines business unit was driven predominately by unfavorable development attributable to the 2020 and 2019 accident years. |
| ● | Runoff Segment. We experienced net favorable development in our binding commercial automobile line of business in the 2018 and prior accident years, as well as in our senior care facilities line of business. We experienced net unfavorable development in our satellite launch business and specialty programs. |
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