The provision related to current year decreased by $17.8 million, or 9.2%, in 2017 from 2016. This decrease was attributable to a lower current year loss rate of 4.0% in 2017 when compared to 4.5% in 2016, partly offset by a 2.1% increase in title premiums and escrow fees in 2017 from 2016.
Impairment of property and equipment. Management uses estimated future cash flows (undiscounted and excluding interest) to measure the recoverability of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be fully recoverable. If the undiscounted cash flow analysis indicates that the carrying amount is not recoverable, an impairment loss is recorded for the excess of the carrying amount over its fair value. Impairment losses on property and equipment, which primarily related to impairments of internally developed software, were $0.5 million, $5.2 million and $10.9 million for 2017, 2016 and 2015, respectively.
The provision for policy losses and other claims, expressed as a percentage of title insurance premiums and escrow fees, was 4.0%, 5.5% and 6.6% for the years ended December 31, 2017, 2016 and 2015, respectively.
Premium taxes as a percentage of specialty insurance segment premiums were 1.7% in 2017 and 2016 and 1.8% in 2015.
Consolidated Statements of Equity for the years ended December 31, 2017, 2016 and 2015
Current year payments, net of recoveries, include $225.6 million, $211.3 million and $198.6 million for the years ended December 31, 2017, 2016 and 2015, respectively, that primarily relate to the Company’s specialty insurance segment. Prior year payments, net of recoveries, include $46.1 million, $41.4 million and $23.1 million for the years ended December 31, 2017, 2016 and 2015, respectively, that relate to the Company’s specialty insurance segment.
A reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expense at December 31, 2017, is as follows:
The exercise of stock options and vesting of RSUs represent a tax benefit that has been reflected as a reduction of income taxes payable and a reduction of income tax expense for the year ended December 31, 2017, and an increase to equity for the year ended December 31, 2016. The benefits recorded were $3.4 million for the years ended December 31, 2017 and 2016.
The First American Financial Corporation 401(k) Savings Plan (the “Savings Plan”) allows for employee-elective contributions up to the maximum amount as determined by the Internal Revenue Code. The Company makes discretionary contributions to the Savings Plan based on profitability, as well as the contributions of participants. Effective July 1, 2015, participants in the Savings Plan can no longer make additional investments in common stock of the Company. The Savings Plan held 2,428,000 shares and 2,695,000 shares of the Company’s common stock, representing 2.2% and 2.5% of the Company’s total common shares outstanding at December 31, 2017 and 2016, respectively.
The following tables present a summary of the changes in the fair values of Level 3 assets, measured on a recurring basis, for the years ended December 31, 2017 and 2016:
The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments not measured at fair value as of December 31, 2017 and 2016: