Assurant 2014 Annual Report Download - page 40

ASSURANT, INC. – 2014 Form 10-K26
PART I
ITEM 1A Risk Factors
the appropriateness of the Company’s premium rates for
its lender-placed insurance products. If, in the aggregate
further reviews by state departments of insurance lead to
signifi cant decreases in premium rates for the Company’s
lender-placed insurance products, our results of operations
could be materially adversely affected.
Further, actions by certain regulators may cause changes
to the structure of the lender-placed insurance industry,
including the arrangements under which we issue insurance
and track coverage on mortgaged properties. These changes
could materially adversely affect the results of operations of
Assurant Specialty Property and the results of operations and
fi nancial condition of the Company. See Item 1, “Business—
Regulation” and Item 7, “MD&A—Results of Operations—
Assurant Specialty Property — Regulatory Matters.”
In addition, the Company is involved in a variety of litigation
relating to its current and past business operations and may
from time to time become involved in other such actions.
In particular, the Company is a defendant in class actions
in a number of jurisdictions regarding its lender-placed
insurance programs. These cases allege a variety of claims
under a number of legal theories. The plaintiffs seek premium
refunds and other relief. The Company continues to defend
itself vigorously in these class actions and, as appropriate,
to enter into settlements.
We participate in settlements on terms that we consider
reasonable in light of the strength of our defenses; however,
the results of any pending or future litigation and regulatory
proceedings are inherently unpredictable and involve
signifi cant uncertainty. Unfavorable outcomes in litigation
or regulatory proceedings, or signifi cant problems in our
relationships with regulators, could materially adversely
affect our results of operations and fi nancial condition, our
reputation, our ratings, and our ability to continue to do
business. They could also expose us to further investigations
or litigation. In addition, certain of our clients in the mortgage
and credit card and banking industries are the subject of
various regulatory investigations and litigation regarding
mortgage lending practices, credit insurance, debt-deferment
and debt cancelation products, and the sale of ancillary
products, which could indirectly affect our businesses.
Changes in regulation may reduce our
profi tability and limit our growth.
Legislation or other regulatory reform that increases the
regulatory requirements imposed on us or that changes the
way we are able to do business may signifi cantly harm our
business or results of operations in the future. If we were
unable for any reason to comply with these requirements,
it could result in substantial costs to us and may materially
adversely affect our results of operations and fi nancial
condition.
In addition, new interpretations of existing laws, or new
judicial decisions affecting the insurance industry, could
adversely affect our business.
Legislative or regulatory changes that could signifi cantly
harm our subsidiaries and us include, but are not limited to:
• imposed reductions on premium levels, limitations on
the ability to raise premiums on existing policies, or new
minimum loss ratios;
•
increases in minimum capital, reserves and other fi nancial
viability requirements;
•
enhanced or new regulatory requirements intended to
prevent future fi nancial crises or to otherwise ensure the
stability of institutions;
•new licensing requirements;
•
restrictions on the ability to offer certain types of insurance
products;
•
prohibitions or limitations on provider fi nancial incentives
and provider risk-sharing arrangements;
•
more stringent standards of review for claims denials or
coverage determinations;
•
additional guaranteed-issue requirements restricting our
ability to limit or deny coverage;
•new benefi t mandates;
•increased regulation relating to lender-placed insurance;
•
limitations on our ability to build appropriate provider
networks and, as a result, manage health care and utilization
due to “any willing provider” legislation, which requires us
to take any provider willing to accept our reimbursement;
• 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.
In recent years, signifi 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 benefi ciaries. Certain state insurance regulators have
also focused on this issue. For example, the NYDFS 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 benefi ciary. The
Company evaluated the impact of the NCOIL model rule and
established reserves for additional claim liabilities in certain
of its businesses. 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