Assurant 2014 Annual Report Download - page 30

ASSURANT, INC. – 2014 Form 10-K16
PART I
ITEM 1A Risk Factors
with several separate networks of health and dental care
providers through which we obtain discounts. In Assurant
Employee Benefi ts, we have relationships through DRMS with
group insurance carriers to reinsure their disability and life
insurance product offerings. Typically, these relationships
and contractual arrangements have terms ranging from one
to fi ve years.
If our key clients, intermediaries or others terminate important
business arrangements with us, or renew contracts on terms
less favorable to us, our cash fl ows, results of operations and
fi nancial condition could be materially adversely affected. For
example, in our lender-placed insurance business, the change
in requirements for eligibility to insure properties securing
loans of GSEs—and restrictions imposed by state regulators —
could affect our ability to do business with certain mortgage
loan servicers or the volume or profi tability of such business.
In addition, the transfer by mortgage servicer clients of loan
portfolios to other carriers or the participation by other
carriers in insuring or reinsuring lender-placed insurance risks
that we have historically insured could materially reduce
our revenues and profi ts from this business. In our Assurant
Health and Assurant Employee Benefi ts segments, a loss of
one or more of certain discount arrangements we maintain
with PPOs could lead to higher medical or dental costs and/
or a loss of members to other medical or dental plans.
We are also subject to the risk that these parties may face
fi nancial diffi culties, reputational issues or problems with
respect to their own products and services or regulatory
restrictions that may lead to decreased sales of our products
and services. Moreover, if one or more of our clients or
distributors consolidate or align themselves with other
companies, we may lose signifi cant business, resulting in
material decreases in revenues and profi ts.
We face signifi cant competitive pressures in
our businesses, which could affect our results
of operations.
We compete for customers and distributors with many
insurance companies and other fi nancial services companies
for business and individual customers, employer and other
group customers, agents, brokers and other distribution
relationships. Some of our competitors may offer a broader
array of products than our subsidiaries or have a greater
diversity of distribution resources, better brand recognition,
more competitive pricing, lower costs, greater fi nancial
strength, more resources, or higher ratings.
Many of our insurance products, particularly our group
benefi ts and group health insurance policies, are underwritten
annually. There is a risk that group purchasers may be able
to obtain more favorable terms from competitors, rather
than renewing coverage with us. As a result, competition
may adversely affect the persistency of our policies, as
well as our ability to sell products. In addition, some of our
competitors may price their products below ours, putting
us at a competitive disadvantage and potentially adversely
affecting our revenues and results of operations.
New competition could also cause the supply of insurance to
change, which could affect our ability to price our products at
attractive rates and thereby adversely affect our underwriting
results. Although there are some impediments facing potential
competitors who wish to enter the markets we serve, the entry
of new competitors into our markets can occur, affording our
customers signifi cant fl exibility in moving to other insurance
providers.
In our lender-placed insurance business, we use a proprietary
insurance-tracking administration system linked with the
administrative systems of our clients to monitor the clients’
mortgage portfolios to verify the existence of insurance
on each mortgaged property and identify those that are
uninsured. If, in addition to our current competitors, others
in this industry develop a competing system or equivalent
administering capabilities, this could reduce the revenues
and results of operations in this business.
Sales of our products and services may be
reduced if we are unable to attract and
retain sales representatives or to develop
and maintain distribution sources.
We distribute many of our insurance products and services
through a variety of distribution channels, including
independent employee benefi ts specialists, brokers, managing
general agents, life agents, fi nancial institutions, mortgage
lenders and servicers, retailers, funeral homes, association
groups and other third-party marketing organizations.
Our relationships with these distributors are signifi cant both for
our revenues and profi ts. We do not distribute our insurance
products and services through captive or affi liated agents. In
Assurant Health, we depend in large part on the services of
independent agents and brokers and on associations in the
marketing of our products. In Assurant Employee Benefi ts,
independent agents and brokers who act as advisors to our
customers market and distribute our products. There is
intense competition between insurers to form relationships
with agents and brokers of demonstrated ability. We compete
with other insurers for relationships with agents, brokers, and
other intermediaries primarily on the basis of our fi nancial
position, support services, product features and, more
generally, through our ability to meet the needs of their
clients, our customers. Independent agents and brokers are
typically not exclusively dedicated to us, but instead usually
also market the products of our competitors and therefore we
face continued competition from our competitors’ products.
Moreover, our ability to market our products and services
depends on our ability to tailor our channels of distribution
to comply with changes in the regulatory environment in
which we and such agents and brokers operate.
We have our own sales representatives whose distribution
process varies by segment. We depend in large part on
our sales representatives to develop and maintain client
relationships. Our inability to attract and retain effective
sales representatives could materially adversely affect our
results of operations and fi nancial condition.