Assurant 2012 Annual Report Download - page 32

ASSURANT, INC.2012 Form10-K24
PARTI
ITEM 1A Risk Factors
rate  lings vary by state as a result of di ering regulatory requirements,
expected loss experience and catastrophe exposure, the results of such
reviews may vary widely. It is possible that other state departments of
insurance and regulatory authorities may choose to initiate or continue
to review 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 signi cant decreases in premium
rates for the Company’s lender-placed insurance products, our results
of operations could be materially adversely a ected.
Unfavorable outcomes in litigation or regulatory proceedings, or
signi cant problems in our relationships with regulators, could materially
adversely a ect our results of operations and  nancial condition, our
reputation, our ratings, and our ability to continue to do business.
 ey could also expose us to further investigations or litigations. In
addition, certain of our clients in the mortgage and credit card and
banking industries are the subject of various regulatory investigations
and/or litigation regarding mortgage lending practices, credit insurance,
debt-deferment and debt cancelation products, and the sale of ancillary
products, which could indirectly a ect our businesses.
Changes in regulation may reduce our pro 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 signi cantly harm our business or results of operations
in the future. For example, some states have imposed new time limits
for the payment of uncontested covered claims and require health
care and dental service plans to pay interest on uncontested claims
not paid promptly within the required time period. Some states have
also granted their insurance regulatory agencies additional authority to
impose monetary penalties and other sanctions on health and dental
plans engaging in certain unfair payment practices. If we were unable
for any reason to comply with these requirements, it could result in
substantial costs to us and may materially adversely a ect our results
of operations and  nancial condition.
In addition, new interpretations of existing laws, or new judicial decisions
a ecting the insurance industry, could adversely a ect our business.
Legislative or regulatory changes that could signi 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  nancial viability
requirements;
• enhanced or new regulatory requirements intended to prevent future
 nancial crises or to otherwise ensure the stability of institutions;
•new licensing requirements;
• restrictions on the ability to o er certain types of insurance products;
• prohibitions or limitations on provider  nancial incentives and
provider risk-sharing arrangements;
• more stringent standards of review for claims denials or coverage
determinations;
• guaranteed-issue requirements restricting our ability to limit or deny
coverage;
•new bene 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, 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 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 bene ciary. In 2011, the Company 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. In addition, it is
possible that these regulators or regulators in other states may adopt
regulations similar to the NCOIL model rule or to the requirements
imposed by the NYDFS.
Recently, regulators in certain states have hired third party auditors to
audit the unclaimed property records of insurance companies operating
in those states. Among other companies, the Company is currently
subject to these audits in a number of states.
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