Company: NODK
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0001174947-25-000304
Chunk: 930

Company: NI Holdings, Inc.
Filing Date: 2025-03-07
Form: 10-K
Item: Item 2
Chunk 930
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expenses). Our liability for unpaid losses and loss adjustment expenses consists of (1) case reserves, which are reserves for claims that
have been reported to us, and (2) IBNR, which represents reserves for claims that have been incurred but have not yet been reported and
for the future development of reported claims. As some claims may not be reported for several years, the liability for unpaid losses and
loss adjustment expenses may include significant estimates for IBNR based on the time necessary to settle the claim.

Loss adjustment expenses consist of two components – allocated
loss adjustment expenses and unallocated loss adjustment expenses. Allocated loss adjustment expenses are the expenses for defense and
cost containment, including legal fees, court costs, and investigation fees, which are linked to the settlement of specific individual
claims or losses. Unallocated loss adjustment expenses are expenses that generally cannot be associated with a specific claim, including
internal costs such as salaries and other overhead costs. Estimates of future costs to administer reported and unreported claims for both
allocated and unallocated expenses are included in IBNR.

When a claim is reported to one of the insurance companies, its
claims personnel establish a case reserve for the estimated amount of the ultimate payment to the extent it can be determined or estimated,
in many cases a default reserve is utilized until the claims personnel can determine a more claim specific amount. The amount of the loss
reserve for the reported claim is based primarily upon an evaluation of coverage, liability, damages suffered, and any other information
considered pertinent to estimating the exposure presented by the claim. Each claim is contested or settled individually based upon its
merits, and some property and casualty claims may take years to resolve, especially in situations where legal action may be involved.
Case reserves are reviewed on a regular basis and are updated as new information becomes available.

When a catastrophe occurs, which in our case usually involves the
weather perils of wind and hail, we utilize mapping technology, through geographic coding of our property risks, to overlay the path of
the storm. This enables us to establish estimated damage amounts based on the wind speed and size of the hail for case or per claim loss
amounts. This process allows us to determine within a 

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reasonable time (5-7 days) an estimated number of claims and estimated losses from
the storm. We have also begun reviewing the results of the predicted cost of the claim generated by the catastrophe models as a reasonability
check on the anticipated cost of the storm. If we estimate the damages to