Company: NODK
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0001174947-25-000304
Chunk: 290

Company: NI Holdings, Inc.
Filing Date: 2025-03-07
Form: 10-K
Item: Item 1A
Chunk 290
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 a change in tax rates is recognized in the period of
the enactment date. Total income taxes reflect both current income taxes and the change in the net deferred income tax asset or liability,
excluding amounts attributed to accumulated other comprehensive income.

Critical Accounting Policies

General

The preparation of financial statements in accordance
with GAAP requires both the use of estimates and judgment relative to the application of appropriate accounting policies. We are required
to make estimates and assumptions in certain circumstances that affect amounts reported in our consolidated financial statements and related
footnotes. We evaluate these estimates and assumptions on an ongoing basis based on historical developments, market conditions, industry
trends, and other information that we believe to be reasonable under the circumstances. There can be no assurance that actual results
will conform to these estimates and assumptions and that reported results of operations would not be materially adversely affected by
the need to make accounting adjustments to reflect changes in these estimates and assumptions from time to time. We believe the following
policies are the most sensitive to estimates and judgments.

Unpaid Losses and Loss Adjustment Expenses

How reserves are established

With respect to our traditional property and casualty insurance
products, we maintain reserves for the payment of claims (indemnity losses) and expenses related to adjusting those claims (loss adjustment
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