Democratic Congress OK for industry traditionally tied to Republicans

The new Congress may be blue on Capitol Hill, but insiders say that’s not necessarily a bad color for the insurance industry.

“The more things change, the more they may remain pretty much the same,” said National Association of Professional Insurance Agents’ Executive Vice President and CEO Len Brevik. While at first glance, some might be tempted to conclude that Democrats controlling the House and the Senate will be a negative for the insurance industry and for independent insurance agents, that may not be entirely the case, Brevik said.

Charles Symington, senior vice president of government affairs and federal relations, for the Independent Insurance Agents and Brokers of America, maintains that a Democratic Congress just sets the bar a little higher when it comes to convincing federal policymakers to make positive changes for the insurance marketplace.

“Generally you’ll see the Democratic Congress be more consumer-driven,” he said. But “a lot of the issues remain the same … insurance regulatory reform, terrorism insurance, flood insurance reform, crop insurance … the issues don’t change.”

Dennis Kelly of the American Insurance Association says his group isn’t worried about the new blue Congress. “We wouldn’t view it as something we cannot work with,” he said. Kelly said the industry just may have to adjust a bit, and do more work to make their case known on important issues.

The election result didn’t catch many by surprise. “You are hearing a lot about this being a tidal wave, but it’s an expected tidal wave quite frankly,” said Ben McKay, senior vice president of government relations, for the Property Casualty Insurers Association of America.

While blue, some Democrats joining the nation’s Congress might differ from their fellow Democrats in D.C. on issues. “When you look at many of the newly-elected Democrats, some are more moderate,” Brevik said.

Also, some of the veteran Democrats the industry will now work with are friends.

“Some who are in line for leadership positions are well-attuned to the importance of the insurance industry to the American economy, such as Rep. Paul E. Kanjorski, D-Pa., the most senior Democrat on the House subcommittee overseeing the insurance industry. Rep. Kanjorski has a keen appreciation of the key role played by Main Street insurance agents in assuring continued prosperity. And in contrast to campaign rhetoric, Rep. Barney Frank, D-Mass., who is in line to be chairman of the Financial Services Committee, has had a good working relationship with outgoing Chairman Mike Oxley, R-Ohio.”

Senate committee
On the Senate Banking Committee, Sen. Christopher Dodd, D-Conn., is likely to become the chairman. “[H]e is sensitive to insurance issues,” Kelly said. “Now this does not mean that he is an industry guy or will do whatever the industry wants, but he was a leader on the terrorism insurance issue, and has shown leadership on other insurance priority issues,” Kelly added.

“In short, it is not a foregone conclusion that the insurance industry will necessarily fare less well in the new Congress,” Brevik said.

Key issues at stake
Of top concern to insurers and agents are terrorism insurance, flood insurance reform, and, of course, insurance regulatory reform.

On regulatory reform, several proposals are currently on the table. “You have the targeted federal legislation approach that was utilized in the surplus lines bill that passed the House overwhelmingly, and on the other side you have the Optional Federal Charter” or the National Insurance Act, notes Symington.

Symington believes the debate over federal regulation will continue in the new Congress, however, those in the insurance industry who might be looking to the federal government for deregulation of the marketplace will be looking in the wrong place.

“I believe that [a Democratic Congress] will hurt the case for an optional federal charter, and that those large companies pushing for that proposal need to be very careful of what they wish for because it may look like less of an optional proposal and more like a mandatory federal regulatory solution,” Symington added.

“If insurance companies are pushing federal regulatory proposals in this environment, they may not get the optional charter; they may get something along the lines of increased oversight by changes to the McCarran-Ferguson Act,” he warned.

Partisan issues not a problem
Terrorism insurance is also hot on the minds of the industry, but holds bipartisan support.

“The good news for the terrorism insurance buying community is that this issue has received broad support in the past in both the House and Senate and from both Republicans and Democrats,” said PCI’s McKay.

Symington added that the chances of another extension of the Terrorism Risk Insurance Act might actually increase with the new Democratic controlled Congress.

“Chris Dodd, who will become the chairman of the Senate Banking Committee, he’s been a strong supporter in the past of the terrorism insurance program, as has Barney Frank, who will now be the chairman of the House Financial Services Committee,” Symington said. “In the past there have been some conservative Republicans that have raised questions about the need to continue the program.”

Another non-partisan issue is reform of the National Flood Insurance Program.

“The NFIP has to be addressed this year,” McKay said. “The borrowing authority needs to be increased so you can look for early action at least on that side of it. It has been the intent of Congress so far to attach programmatic reforms to any increase in the borrowing authority. We don’t see any reason why that would change.”

Closer to the center
Overall the 2006 election has moved Congress closer to the center on issues, according to PIA National Senior Vice President Patricia A. Borowski.

“This election has brought in more moderates on both sides of the aisle,” Borowski said. “That tends to permit a more balanced consideration of our issues. Historically, insurance has fared better during times of centrist, results-oriented leadership.”

Floor time
No matter the insurance issue, McKay said the industry may find it tough to get “floor time” during the first 100 days or so.

“Iraq is going to take all the oxygen out of the room and issues such as flood that have to get passed, we’re gong to have to really fight to get floor time and committee time,” he said. “They are talking minimum wage, they are talking investigations, they talking rolling back tax cuts.”

Kelly noted that even after the leadership is settled and priorities are set, the industry still has needs to be met. “We still need an economic safety net for terrorism insurance. The industry still needs regulatory modernization … those are our priorities.”

And priorities must be addressed, regardless of which party controls Congress.

Topics Catastrophe Legislation Agencies Flood Market Oklahoma Politics