Assurant 2014 Annual Report Download - page 22

ASSURANT, INC. – 2014 Form 10-K8
PART I
ITEM 1 Business
Products and Services
Assurant Health competes in the individual medical insurance
market by offering major medical insurance, short-term
medical insurance, and supplemental coverage options
to individuals and families. Our products are offered with
different plan options to meet a broad range of customer
needs, levels of affordability and to meet the requirements
of the Patient Protection and Affordable Care Act and the
Health Care and Education Reconciliation Act of 2010, and
the rules and regulations thereunder (together, the “Affordable
Care Act”). Assurant Health also offers medical insurance to
small employer groups.
The Affordable Care Act was signed into law in March 2010
and has caused sweeping and fundamental changes to the
U.S. health care system and the health insurance industry.
The legislation requires that most individuals obtain health
insurance coverage. It authorizes the establishment of
federal and state exchanges for the purchase of individual
insurance policies and sets minimum standards for the
benefi ts provided by insurance policies. It also imposes
signifi cant requirements on insurance companies, including
the elimination of underwriting and preexisting condition
exclusions for individual policies, the establishment of
minimum loss ratio thresholds, limitations on the tax
deductibility of certain expenses, and a number of new
fees, some of which are not tax deductible.
Although the dynamics and characteristics of the health
insurance market have changed under the Affordable Care
Act, we believe there are still signifi cant opportunities for
growth in the individual insurance market and that Assurant
Health should be able to earn attractive returns over the
long-term. To achieve this goal, we have made and continue
to make signifi cant changes to our operations and products
including reducing general operating costs, reviewing our
pricing assumptions in light of changes in the risk pool of
consumers buying policies and evaluating our product portfolio.
Our new 2015 individual and small employer group medical
products, which include all of the essential health benefi ts
required under the Affordable Care Act, are approved and
ready for sale. Our individual medical products are available
in 41 states and on the insurance public marketplace in 16 of
those states. Our small group medical plans are available
in 34 states.
Individual Medical
Our medical insurance products are sold to individuals,
primarily between the ages of 18 and 64, and their families,
who do not have employer-sponsored coverage. We offer a
wide variety of benefi t plans at different price points, which
allow customers to tailor their coverage to fi t their unique
needs. These plans include those with the essential health
benefi ts required under the Affordable Care Act, as well as
supplemental products.
Small Employer Group Medical
Our group medical insurance is primarily sold to small
companies with two to fi fty employees, although larger
employer coverage is available. We offer fully insured
products with the essential health benefi ts required by the
Affordable Care Act, as well as self-funded employer options
and individual products sold through the workplace.
In March 2012, we entered into a new provider network
arrangement with Aetna Signature Administrators
®
(“Aetna”).
This multi-year agreement provides our major medical
customers with access to more than one million health
care providers and 7,500 hospitals nationwide. Access to
this network has enhanced the competitiveness of Assurant
Health for individuals, families, and small groups.
Marketing and Distribution
Our health insurance products are principally marketed
through a network of independent agents. We also market
through a variety of exclusive and non-exclusive national
account relationships and direct distribution channels. Since
2000, we have had a national marketing agreement with
a major mutual insurance company whose captive agents
market our individual health products. This agreement expires
in September 2018 and allows either company to exit the
agreement with six months’ notice. We provide many of our
products through a well-known association’s administrator
under an agreement that automatically renews annually.
Underwriting and Risk Management
Following the passage of the Affordable Care Act, many of the
traditional risk management techniques used to manage the
risks of providing health insurance have become less relevant.
Assurant Health has taken steps to adjust its products, pricing
and business practices to comply with the new requirements.
Please see “Management’s Discussion and Analysis — Assurant
Health” and “Risk Factors — Risks Related to our Industry —
Reform of the health insurance industry could materially
reduce the profi tability of certain of our businesses or render
them unprofi table” for further details.