Assurant announced on Wednesday that it would pull out of the health insurance market by the end of 2016. The news comes after the insurer first announced on April 28th that its health insurance division would be sold off or closed.
Somewhat Reasonable first reported on May 5th of Assurant considering this route due to spending mandates in the Patient Protection and Affordable Care Act of 2009. ACA requires insurers to spend 80 cents of every health care dollar for medical care or quality initiatives. Some financial analysts predicted three years ago that the insurer would leave the market due to Obamacare’s mandates.
Assurant struggled financially despite receiving $1.8 billion in revenue during the 2014 calendar year. The insurer posted losses of $64 million in 2014, along with $84 million for the first quarter of 2015. The insurer will now focus its business on niche insurance products such as extended service contracts and pre-paid funeral plans. Roughly 967,000 policy holders will now have to find new health insurance, and 1,200 employees at Assurant’s corporate headquarters in downtown Milwaukee are expected to lose their jobs.
Employees will be considered for open positions within the company or receive severance payments and outplacement assistance.