Company: NODK
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0001174947-25-000304
Chunk: 305

Company: NI Holdings, Inc.
Filing Date: 2025-03-07
Form: 10-K
Item: Item 1A
Chunk 305
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 that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below
are matters arising from the current-period audit of the consolidated financial statements that were communicated or required to be communicated
to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements
and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of Losses and Loss Adjustment
Expenses Reserves 

Critical Audit Matter Description

On December 31, 2024, the Company’s liability
for unpaid losses and loss adjustment expenses was approximately $137 million. As described in Note 3 and 8, the Company’s property
and casualty insurance loss and loss expenses reserves (referred to as “losses and loss expenses reserves”), are determined
by the Company using actuarial methods, models, assumptions, and judgment to estimate the reserves required to pay for and settle all
outstanding insured claims as of the consolidated financial statement date. There is significant uncertainty inherent in determining management’s
best estimate of the losses and loss expenses reserves, requiring the use of informed actuarially based estimates and management’s
judgment. The actuarial estimate of losses and loss expenses reserves is subject to review and adjustment by Company management.

Losses and loss expenses are inherently uncertain
as to timing and amount and the recorded losses and loss expense reserves may vary materially from the actual ultimate cost of claims.
Given the subjectivity in estimating ultimate losses and loss expenses, due