Assurant 2013 Annual Report Download - page 25

ASSURANT, INC. – 2013 Form 10-K 13
PART I
ITEM 1 Business
Financial Reporting
Regulators closely monitor the fi nancial condition of licensed
insurance companies and our insurance subsidiaries are
required to fi le periodic fi nancial reports with insurance
regulators. Moreover, states regulate the form and content
of these statutory fi nancial statements.
Products and Coverage
Insurance regulators have broad authority to regulate many
aspects of our products and services. For example, some
jurisdictions require insurers to provide coverage to persons
who would not be considered eligible insurance risks under
standard underwriting criteria, dictating the types of insurance
and the level of coverage that must be provided to such
applicants. Additionally, certain non-insurance products
and services, such as service contracts, may be regulated
by regulatory bodies other than departments of insurance.
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, recent legislative actions were taken at the federal
level that impose added restrictions on our business, in
particular Assurant Health and Assurant Employee Benefi ts.
In March 2010, President Obama signed the Affordable Care
Act into law. Provisions of the Affordable Care Act and related
reforms have and will continue to become effective at various
dates over the next several years. These provisions and
related impacts include 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 as it applies to enrollees under the age
of 19 who apply for coverage; limits on our ability to rescind
coverage for persons who have misrepresented or omitted
material information when they applied for coverage and,
after January 1, 2014, 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; requirements to include the package of
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 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.
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,