Assurant 2013 Annual Report Download - page 37

ASSURANT, INC. – 2013 Form 10-K 25
PART I
ITEM 1A Risk Factors
Risks Related to Our Industry
We are subject to extensive laws and
regulations, which increase our costs and could
restrict the conduct of our business.
Our insurance and other subsidiaries are subject to extensive
regulation and supervision in the jurisdictions in which they
do business. Such regulation is generally designed to protect
the interests of policyholders or other customers. To that
end, the laws of the various states and other jurisdictions
establish insurance departments and other regulatory bodies
with broad powers over, among other things: licensing and
authorizing the transaction of business; capital, surplus and
dividends; underwriting limitations; companies’ ability to enter
and exit markets; statutory accounting and other disclosure
requirements; policy forms; coverage; companies’ ability to
provide, terminate or cancel certain coverages; premium
rates, including regulatory ability to disapprove or reduce
the premium rates companies may charge; trade and claims
practices; certain transactions between affi liates; content
of disclosures to consumers; type, amount and valuation of
investments; assessments or other surcharges for guaranty
funds and companies’ ability to recover assessments through
premium increases; and market conduct and sales practices.
For a discussion of various laws and regulations affecting our
business, please see Item 1, “Business—Regulation.”
If regulatory requirements impede our ability to conduct
certain operations, our results of operations and fi nancial
condition could be materially adversely affected. In addition,
we may be unable to maintain all required licenses and
approvals and our business may not fully comply with the
wide variety of applicable laws and regulations or the relevant
regulators’ interpretation of these laws and regulations.
In such events, the insurance regulatory authorities could
preclude us from operating, limit some or all of our activities,
or fi ne us. Such actions could materially adversely affect our
results of operations and fi nancial condition.
Our business is subject to risks related to
litigation and regulatory actions.
From time to time, we may be subject to a variety of legal
and regulatory actions relating to our current and past
business operations, including, but not limited to:
• actions by regulatory authorities that may restrict our
ability to increase or maintain our premium rates, require
us to reduce premium rates, imposes fi ne or penalties and
result in other expenses;
• market conduct examinations, for which we are required
to pay the expenses of the regulator as well as our own
expenses, and which may result in fi nes, penalties, or other
adverse consequences;
• disputes regarding our lender-placed insurance products
including those relating to rates, agent compensation,
consumer disclosure, continuous coverage requirements,
loan tracking services and other services that we provide
to mortgage servicers;
•disputes over coverage or claims adjudication;
• disputes over our treatment of claims, in which states or
insureds may allege that we failed to make required payments
or to meet prescribed deadlines for adjudicating claims;
• disputes regarding sales practices, disclosures, premium
refunds, licensing, regulatory compliance, underwriting
and compensation arrangements;
• disputes with agents, brokers or network providers over
compensation and termination of contracts and related claims;
• disputes alleging bundling of credit insurance and warranty
products with other products provided by fi nancial institutions;
• disputes with tax and insurance authorities regarding our
tax liabilities;
• disputes relating to customers’ claims that the customer
was not aware of the full cost or existence of the insurance
or limitations on insurance coverage; and
• industry-wide investigations regarding business practices
including, but not limited to, the use and the marketing of
certain types of insurance policies or certifi cates of insurance.
The premiums we charge are subject to review by regulators.
If they consider our loss ratios to be too low, they could
require us to reduce our rates. Signifi cant rate reductions
could materially reduce our profi tability.
On October 7, 2013, American Security Insurance Company
(“ASIC”), a wholly owned subsidiary of the Company, reached
an agreement with the Florida Offi ce of Insurance Regulation
(“FOIR”) to fi le for a 10% reduction in lender-placed hazard
insurance rates in that state. Once fi led and approved, these
rates will be effective for new and renewing policies starting
in fi rst quarter 2014. As part of the agreement, ASIC will
eliminate commissions and client quota-share reinsurance
arrangements to meet new requirements of lender-placed
insurance providers in Florida. These new lender-placed
practices are expected to take effect one year following
the agreement. ASIC recorded approximately $547,000 and
$510,000 of direct earned premiums in Florida for full year
2013 and 2012, respectively, for the type of policies that
are subject to the rate reduction.
In addition, on March 21, 2013, the Company and two of
its wholly owned subsidiaries, ASIC and American Bankers
Insurance Company of Florida (“ABIC”), reached an agreement
with the New York Department of Financial Services (“NYDFS”)
regarding the Company’s lender-placed insurance business in
the State of New York. Under the terms of the agreement,
and without admitting or denying any wrongdoing, ASIC
made a $14,000 (non tax-deductible) settlement payment