Assurant 2015 Annual Report Download - page 38

ASSURANT, INC. – 2015 Form 10-K26
PART I
ITEM 1A Risk Factors
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. 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 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 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 offer certain types of insurance
products or service contracts;
• prohibitions or limitations on provider nancial incentives
and provider risk-sharing arrangements;
• more stringent standards of review for claims denials or
coverage determinations;
•new benet mandates;
•increased regulation relating to lender-placed insurance;
• 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. 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 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.
In addition, 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 and has been responding to information requests
from these auditors�
Proposals are currently pending to amend state insurance
holding company laws to increase the scope of insurance
holding company regulation. These include the NAIC
“Solvency Modernization Initiative,” which focuses on capital
requirements, and the Solvency II Directive, which became
effective in January 2016. The Solvency II Directive reforms
the insurance industry’s solvency framework, including, among
other items, minimum capital and solvency requirements.
Various state and federal regulatory authorities have taken
actions with respect to our lender-placed insurance business. On
January 16, 2015, at the request of the Indiana Department of
Insurance, the National Association of Insurance Commissioners
(the “NAIC”) authorized an industry-wide multistate targeted
market conduct examination focusing on lender placed
insurance. Several insurance companies, including American
Security Insurance Company, are subject to the examination.
At present, 43 jurisdictions are participating� During the
course of 2015, the Company has cooperated in responding to
requests for information and documents and has engaged in
various communications with the examiners. The examination
continues and no nal report has been issued.
We cannot predict the full effect of these or any other
regulatory initiatives on the Company at this time, but they
could have a material adverse effect on the Company’s results
of operations, cash ows and nancial condition.
Reform of the health insurance industry could
materially reduce the protability of certain
of our businesses or render them unprotable.
Although the Assurant Health business is in run-off, some
provisions of the Affordable Care Act continue to apply to us.
As a result, although Assurant Health has made, and continues
to make, signicant changes to its operations and products to
adapt to the new environment consistent with the wind-down,
this business continues to experience losses, which we have
been and may continue to be unable to limit to the extent
we would like through the completion of the wind-down.