Company: NODK
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0001174947-25-000304
Chunk: 722

Company: NI Holdings, Inc.
Filing Date: 2025-03-07
Form: 10-K
Item: Item 1C
Chunk 722
---
that in their opinion will provide a conservative amount to settle the loss. If the time to settle the claim extends over a period of
years, which is possible but unlikely as we usually settle claims in less than a year on average, the initial reserve may not anticipate
an economic inflation rate that is significantly higher than the current inflation rate. This can also apply to IBNR reserves. Should
the economic inflation rate increase significantly, we may not anticipate the need to adjust the IBNR reserves accordingly, which could
lead to deficient IBNR reserves.

Increases or decreases in claim severity for reasons other than
inflation

Factors exist that can drive the cost to settle claims for reasons
other than standard inflation. For example, demand surge caused by a significant catastrophe, such as a derecho, has an impact on not
only the availability and cost of building materials such as roofing and other materials, but also the availability and cost of labor.
Numerous other factors could also cause claim severity to increase beyond what our historic reserves would reflect. In addition, unexpected
increases in labor, healthcare, or building material costs and other factors may cause fluctuations in the ultimate development of the
case reserves.

Actual settlement experience different from historical data trends

When establishing IBNR reserves, our actuaries consider many of
the factors discussed above. One of the more important factors that is considered when setting reserves is the past or historical claim
settlement experience. Our actuaries consider factors such as the number of files entering litigation, payment patterns, length of time
it takes our claims personnel to settle the claims, and average payment amounts when estimating reserve amounts. Should future settlement
patterns change due to the legal environment, our claims handling philosophy, or personnel, it may have an impact on the future claims
payments, which could cause existing reserves to either be redundant (excessive) or deficient (below) compared to the actual loss amount.

Change in Reporting Lag

As discussed above, we utilize historical patterns to provide an
accurate estimate of what will take place in the future. Should we experience an unexpected delay in reporting time (claims are slower
to be reported than in the past), we may underestimate the anticipated number of future claims, which could cause the ultimate loss we
may experience to be underestimated. A lag in reporting may be caused by changes in how claims are reported, the types or lines of business
we write, our distribution system, and the geographic area where we choose to insure risk.

Due to the inherent uncertainty underlying loss reserve estimates,
final