Assurant 2014 Annual Report Download - page 27

ASSURANT, INC. – 2014 Form 10-K 13
PART I
ITEM 1 Business
Pricing and Premium Rates
Nearly all states have insurance laws requiring insurers to fi le
price schedules and policy forms with the state’s regulatory
authority. In many cases, these price schedules and/or policy
forms must be approved prior to use, and state insurance
departments have the power to disapprove increases or
require decreases in the premium rates we charge.
Market Conduct Regulation
Activities of insurers are highly regulated by state insurance
laws and regulations, which govern the form and content
of disclosure to consumers, advertising, sales practices and
complaint handling. State regulatory authorities enforce
compliance through periodic market conduct examinations.
Guaranty Associations and Indemnity Funds
Most states require insurance companies to support guaranty
associations or indemnity funds, which are established to pay
claims on behalf of insolvent insurance companies. These
associations may levy assessments on member insurers. In
some states member insurers can recover a portion of these
assessments through premium tax offsets and/or policyholder
surcharges.
Insurance Regulatory Initiatives
The NAIC, state regulators and professional organizations have
considered and are considering various proposals that may alter
or increase state authority to regulate insurance companies
and insurance holding companies. Please see Item 1A,
“Risk Factors—Risks Related to Our Industry—Changes in
regulation may reduce our profi tability and limit our growth”
for a discussion of the risks related to such initiatives.
Federal Regulation
Patient Protection and Affordable Care Act
Although health insurance is generally regulated at the
state level, the Affordable Care Act introduced a signifi cant
component of federal regulation for health insurers. Provisions
of the Affordable Care Act and related reforms have included
a requirement that we pay premium rebates to customers
if the loss ratios for some of our product lines are less than
specifi ed percentages; the reduction of agent commissions,
and the consequent risk that insurance producers may sell
less of our products than they have in the past; changes in the
benefi ts provided under some of our products; elimination of
limits on lifetime and annual benefi t maximums; a prohibition
from imposing any pre-existing condition exclusion; limits
on our ability to rescind coverage for persons who have
misrepresented or omitted material information when
they applied for coverage and, elimination of our ability to
underwrite health insurance products with certain narrow
exceptions; a requirement to offer coverage to any person
who applies for such coverage; mandated essential health
benefi ts; increased costs to modify and/or sell our products;
intensifi ed competitive pressures that limit our ability to
increase rates due to state and federal insurance exchanges;
signifi cant risk of customer loss; new and higher taxes and
fees and limitations on the deductibility of compensation
and certain other payments; and the need to operate with
a lower expense structure at both the business segment and
enterprise level. Additionally, under the Affordable Care Act,
signifi cant premium stabilization programs became effective
in 2014. These reinsurance, risk adjustment, and risk corridor
programs impose certain requirements on us, including,
among other things, that we make contributions to fund the
reinsurance program and, under some circumstances, risk
transfer payments related to the risk adjustment program and
payments to the Department of Health and Human Services
related to the risk corridor program.
Employee Retirement Income Security Act
Because we provide products and services for certain U.S.
employee benefi t plans, we are subject to regulation under
the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”). ERISA places certain requirements on how
the Company may do business with employers that maintain
employee benefi t plans covered by ERISA. Among other things,
regulations under ERISA set standards for certain notice and
disclosure requirements and for claim processing and appeals.
In addition, some of our administrative services and other
activities may also be subject to regulation under ERISA.
HIPAA, HITECH Act and Gramm-Leach-Bliley Act
The Health Insurance Portability and Accountability Act of
1996, along with its implementing regulations (“HIPAA”),
impose various requirements on health insurers, HMOs,
health plans and health care providers. Among other things,
Assurant Health and Assurant Employee Benefi ts are subject
to HIPAA regulations requiring certain guaranteed issuance and
renewability of health insurance coverage for individuals and
small groups (generally groups with 50 or fewer employees)
and limitations on exclusions based on pre-existing conditions.
HIPAA also imposes administrative simplifi cation requirements
for electronic transactions.
HIPAA also imposes requirements on health insurers, health
plans and health care providers to ensure the privacy and
security of protected health information. These privacy and
security provisions were further expanded by the privacy
provisions contained in the Health Information Technology
for Economic and Clinical Health Act (the “HITECH Act”) and
its accompanying Omnibus Rule enacted in January 2013,
which enhances penalties for violations of HIPAA and requires
regulated entities to provide notice of security breaches
of protected health information to individuals and HHS. In
addition, certain of our activities are subject to the privacy
regulations of the Gramm-Leach-Bliley Act, which, along
with regulations adopted thereunder, generally requires
insurers to provide customers with notice regarding how
their non-public personal health and fi nancial information
is used, and to provide them with the opportunity to “opt
out” of certain disclosures, if applicable.