Assurant 2011 Annual Report Download - page 31

ASSURANT, INC.2011 Form10-K 23
PARTI
ITEM 1A Risk Factors
•limitations on the ability to manage health care and utilization due
to direct access laws that allow insureds to seek services directly from
specialty medical providers without referral by a primary care provider;
• new or enhanced regulatory requirements that require insurers to
pay claims on terms other than those mandated by underlying policy
contracts; and
• restriction of solicitation of insurance consumers by funeral board
laws for prefunded funeral insurance coverage.
Recently, signi cant attention has been focused on the procedures that life
insurers follow to identify unreported death claims. In November2011,
the National Conference of Insurance Legislators (“NCOIL”) proposed
a model rule that would govern unclaimed property policies for insurers
and mandate the use of the U.S. Social Security Administration’s Death
Master File (the “Death Master File”) to identify deceased policyholders
and bene ciaries. Certain state insurance regulators have also focused on
this issue. For example, the New York Department of Insurance issued a
letter requiring life insurers doing business in New York to use data from
the Death Master File to search proactively for deceased policyholders
and to pay claims without the receipt of a valid claim by or on behalf
of a bene ciary. It is possible that regulators in other states may adopt
regulations similar to the NCOIL model rule or to the requirements
imposed by the New York Department of Insurance.  e Company has
evaluated the impact of the NCOIL model rule and established reserves
for additional claim liabilities in certain of its businesses, including a
$7,500 reserve increase in its preneed business for unreported claims.
It is possible that existing reserves may be inadequate and need to be
increased and/or that the Company may be required to establish reserves
for businesses the Company does not currently believe are subject to the
NCOIL model rule or any similar regulatory requirement.
Several proposals are currently pending to amend state insurance holding
company laws to increase the scope of insurance holding company
regulation.  ese include model laws proposed by the International
Association of Insurance Supervisors and the NAIC that provide
for uniform standards of insurer corporate governance, group-wide
supervision of insurance holding companies, adjustments to risk-based
capital ratios, and additional regulatory disclosure requirements for
insurance holding companies. In addition, the NAIC has proposed a
“Solvency Modernization Initiative” that focuses on capital requirements,
corporate governance and risk management, statutory accounting and
 nancial reporting, and reinsurance. Similarly, the Solvency II Directive,
which was adopted in the European Union on November25,2009
and is expected to become e ective in January2014, reforms the
insurance industry’s solvency framework, including minimum capital
and solvency requirements, governance requirements, risk management
and public reporting standards.
We cannot predict the e ect of these or any other regulatory initiatives
on the Company at this time, but it is possible that they could have
a material adverse e ect on the Company’s results of operations and
 nancial condition.
 e insurance and related businesses in which
we operate may be subject to periodic negative publicity,
which may negatively aff ect our fi nancial results.
We communicate with and distribute our products and services ultimately
to individual consumers.  ere may be a perception that some of these
purchasers may be unsophisticated and in need of consumer protection.
Accordingly, from time to time, consumer advocacy groups or the media
may focus attention on our products and services, thereby subjecting
us to negative publicity.
We may also be negatively a ected if another company in one of our
industries or in a related industry engages in practices resulting in
increased public attention to our businesses. Negative publicity may
also result from judicial inquiries, unfavorable outcomes in lawsuits,
or regulatory or governmental action with respect to our products,
services and industry commercial practices. Negative publicity may
cause increased regulation and legislative scrutiny of industry practices
as well as increased litigation or enforcement action by civil and criminal
authorities. Additionally, negative publicity may increase our costs of
doing business and adversely a ect our pro tability by impeding our
ability to market our products and services, constraining our ability
to price our products appropriately for the risks we are assuming,
requiring us to change the products and services we o er, or increasing
the regulatory burdens under which we operate.
 e insurance industry can be cyclical, which may aff ect
our results.
Certain lines of insurance that we write can be cyclical. Although no
two cycles are the same, insurance industry cycles have typically lasted
for periods ranging from two to ten years. In addition, the upheaval in
the global economy in recent years has been much more widespread
and has a ected all the businesses in which we operate. We expect to
see continued cyclicality in some or all of our businesses in the future,
which may have a material adverse e ect on our results of operations
and  nancial condition.
Risks Related to Our Common Stock
Given the recent economic climate, our stock may be subject
to stock price and trading volume volatility.  e price of our
common stock could fl uctuate or decline signifi cantly and
you could lose all or part of your investment.
In recent years, the stock markets have experienced signi cant price
and trading volume volatility. Company-speci c issues and market
developments generally in the insurance industry and in the regulatory
environment may have caused this volatility. Our stock price could
materially  uctuate or decrease in response to a number of events and
factors, including but not limited to: quarterly variations in operating
results; operating and stock price performance of comparable companies;
changes in our  nancial strength ratings; limitations on premium
levels or the ability to maintain or raise premiums on existing policies;
regulatory developments and negative publicity relating to us or our
competitors. In addition, broad market and industry  uctuations may
materially and adversely a ect the trading price of our common stock,
regardless of our actual operating performance.