Company: NODK
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0001174947-25-000304
Chunk: 933

Company: NI Holdings, Inc.
Filing Date: 2025-03-07
Form: 10-K
Item: Item 2
Chunk 933
---
 claims that have been reported, investigated,
and adjusted by our claims staff. Therefore, the reserves carried in these more recent accident years are generally more conservative
than those carried for older accident years. As we have the opportunity to investigate and adjust the reported claims, both the case and
IBNR reserves are adjusted to more closely reflect the ultimate expected loss.

39 

Other factors that may have an impact on our case and IBNR reserves
include, but are not limited to, those described below.

Changes in liability law and public attitudes regarding damage
awards

Laws governing liability claims and judicial interpretations thereof
can change over time, which can expand the scope of coverage anticipated by insurers when initially establishing reserves for claims.
In addition, public attitudes regarding damage awards can result in judges and juries granting higher recoveries for damages than expected
by claims personnel when reserves are established. In addition, these changes can result in both increased claim frequency and severity
as both plaintiffs and their legal counsel perceive the opportunity for higher damage awards. Reserves established for claims that occurred
in prior years would not have anticipated these legal changes and, therefore, could prove to be inadequate for the ultimate losses paid
by the Company, causing us to experience adverse development and higher loss payments in future years.

Change in claims handling and/or setting case reserves

Changes in Company personnel and/or the approach to how claims are
reported, adjusted, and reserved may affect the reserves we establish. As discussed above, the setting of IBNR reserves is not an exact
science and involves the expert judgment of an actuary. One actuary’s reserve opinion may differ slightly from another actuary’s
opinion. This is the primary reason why the IBNR reserve estimate is customarily reported as a range by a company’s actuary, which
provides a company with an acceptable range to use in establishing its best estimate for IBNR reserves.

Economic inflation

A sudden and extreme increase in the economic inflation rate could
have a significant impact on our case and IBNR reserves. When establishing case reserves, claims personnel generally establish an amount
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,