While one company has gotten out of the business of insuring political campaigns, another is throwing its hat in the ring. Markel Risk Solutions, based in Glen Allen, Va., is offering campaigns a multiline, admitted insurance product that will cover campaigns if, for example, a campaign employee gets into a serious car accident while working or a wealthy benefactress comes to a campaign function, trips over her gown, and decides to sue.
“We think it is an unserved niche,” said Markel’s Managing Director Barrett Hubbard. “Donations deserve protection from known and unknown liabilities.”
Hubbard noted that campaigns for national office are significant operations that take in and spend large amounts. The average campaign for a seat in the U.S. House of Representatives costs $3 million. The average Senate seat costs $10 million.
Hubbard said his company figures this year, in particular, is a good year because so many terms are ending. He said the company estimates that in a year like this, there are potentially 3,500 campaigns that might want insurance, if campaigns for state office and the fact that there are two sides to every campaign are factored in.
“We are very intrigued by the possibility of selling this program,” he said.
Some others, however, are not so sure the market is a winner. American International Group Inc. (AIG) subsidiary Chartis introduced a campaign insurance product two years ago. The company stopped offering the product, LexElect, this year.
Spokeswoman Marie Ali said the company simply was not finding enough interested buyers.
Jerry O’Kane, a former executive director of Insurance Brokers and Agents of the West (IBA West), said that when he heard AIG was offering its package, he wrote down the information in case a candidate asked him about insurance coverage. None ever did. He said he has been asked about insurance by campaigns and campaign managers, but it has always been for special events coverage.
“Usually they wanted a referral to an insurer who might provide it as an in-kind contribution to their campaign,” O’Kane explained.
David E. Poisson, a two-term legislator in the Virginia House of Delegates, who recently lost a bid for re-election, said he does not see how any campaign could afford the coverage, except maybe a large national campaign. Besides, he added, campaigns raise money fast and they spend it fast, and there is not much incentive to hold them liable because by the time a plaintiff got a campaign into court, there would be nothing left to collect.
“If I were going to have bought insurance for anything, it would have been against losing,” Poisson said.
On the other hand, Don Way, a former president of IBA West who works in the San Francisco Bay Area, said he has put together packages of coverage for political candidates. He said a statewide campaign will have about 30 employees and it will engage in many types of activities. Therefore, a campaign has the same exposures that any small business has. Moreover, campaigns have the unique exposure created by all the publishing, speaking and other communicating they do.
“There definitely is an insurance component to a major campaign,” Way said. “If you are in a hard fought campaign, the last thing you want to have to do is defend yourself. It is much nicer to be able to say, ‘Go talk to AIG, or whomever. They’ve got me covered.'”
Markel’s Hubbard said his company has already heard from three campaigns that are interested in exploring a policy. The company is getting the word out about its product by making contacts with two or three agents in each state who are plugged into their state’s politics.
The company contends that the candidate who thinks his campaign has no liability risk is sorely mistaken. Candidates need to be educated about their risk, Hubbard said. And, one thing candidates need to know particularly is that if their campaign does not have the proper legal structure, the liability is going to come back to them, or the campaign manager, or somebody.
Candidates and elections managers “are professionals as far as getting themselves or their people elected, but they are not experts about liability,” Hubbard said.
His company’s CampaignPro package includes insurance coverage for property, crime, general liability, accident/medical, and non-owned automobile. The cost for the proper amount of coverage for an average Senate campaign is going to be about $15,000, Hubbard said. The company also plans to offer a less expensive $2,500 package for smaller races, such as for statehouse posts.
Campaigns can also add on media/communications coverage to protect them should they get sued for libel, slander, errors or omissions or copyright infringement.
Situations like copyright infringement disputes can occur, Hubbard said, noting as an example the minor uproar that was raised over the similarity between the logo used by President Barack Obama’s campaign and a new logo adopted by PepsiCo.
Campaigns have been sued for the unauthorized use of popular songs, Hubbard added.
When asked whether the present economy might dampen the amount of money campaigns have to spend, Hubbard said that individual races will come and go, but the political process will go on, and that should provide steady business.
“One thing about politics is that it is sort of economic neutral,” he said. “People are going to run for office, regardless.”