Republican Candidates Win ‘Big Time’ in Insurance Industry Political Giving in Federal Races

The late U.S. House Speaker Thomas P. “Tip” O’Neill (D-Mass.) is famous for insisting, “All politics is local.” Apparently, O’Neill wasn’t counting the money. When it comes to money in Washington, the biggest players are those with national, not local, profiles and agendas — and large national insurance companies and insurance PACs are among the leaders every year.

In fact, for an industry that is largely regulated at the state rather than federal level, the insurance industry pumps a substantial amount of money into national politics —consistently ranking within the top 10 in industries giving to federal races for president and Congress.

Through August, total insurance industry giving (combined insurance PAC and individual giving to federal candidates for president, House and Senate) reached $25 million as of Aug. 2, 2004, according to the Center for Responsive Politics (CPR), which analyzes the federal reports. Individual and PAC monies for the property/casualty, life and health segments combined are included in CPR’s tallies.

That $25 million is enough to rank the insurance industry seventh out of 80 industries studied by CPR, several months before the spending is over.

In the Red
At first glance, this season’s insurance industry’s contributions to federal candidates appear to lag behind previous years’ totals. In 2000, the industry gave a record $42 million to federal candidates and that record was followed by $37.5 million in 2002.

But the gap will likely be closed before the year ends, at least according to property casualty PAC leaders. The major property casualty PACs for agents and insurers maintain they are on pace to exceed their total 2002 disbursements and believe the industry as a whole will exceed past totals as well.

David Winston is in charge of growing the PAC for the National Association of Mutual Insurance Companies (NAMIC). (Before his current job, he was at the National Association of Insurance and Financial Advisors, which has always had among the largest PACs.)
“We are accumulating funds,” Winston noted, adding that his NAMIC PAC receipts will be way up this year even though disbursements may not be yet. In 2002, NAMIC donated $69,467 to candidates; thus far in 2004, it has disbursed $51,269 (and still has more than $60,000 cash on hand), according to the Federal Election Commission.

Jimi Grande, who runs the PAC for the Property Casualty Insurers Association of America (PCI), expects to give out about $500,000 before the year ends, considerably more than the $300,000 his organization doled out in the 2002 election cycle.

Similarly, Nathan Reidell is on track for his committee, which represents the Independent Insurance Agents & Brokers of America (IIABA), to disburse about $1.1 million by the end of this year’s elections, after giving about $850,000 in 2002.

The $180,000 that the PAC for the American Insurance Association (AIA) spent last cycle will be matched again, predicted Leigh Anne Pusey, AIA senior vice president for government affairs. In addition, Pusey noted, many of her group’s members are large insurers that have their own PACs that give.

In fact, the industry’s political experts maintain that they will rake in and give away more this year than ever before, although the election reports may not reflect this growth until the end of the year for a number of reasons.

Some contributors wait for primaries to be over before giving to favored candidates in time for November elections, noted NAMIC’s Winston in explaining why 2004 totals may appear low right now.

In addition, some committees report only quarterly and not monthly so the August figures may not reflect all of the third quarter contributions, pointed out IIABA’s Reidell.

“It would be highly unusual for a committee to come in under previous figures,” commented Grande, agreeing that a PAC director who did fall short might be looking for a new job.

Out of the Blue
While the total amount of industry giving for 2004 remains murky, the partisan preference is already clear. Not too long ago, the insurance industry could be counted upon to donate about evenly to “blue” Democrats and “red” Republicans in federal races, but the current trend is clearly more in favor of the reds. For 2004, Republicans ($16.8 million) have already received more than twice the amount sent to Democrats ($8.2 million).

In 1990, the insurance industry actually favored Democrats in its federal contributions, 51 to 49 percent. In 1992, the strategy was still mostly bipartisan, with 54 percent going to Republicans and 46 percent to Democrats.

But since the Republicans took control of Congress in 1994, there has been a big swing towards the GOP. In 1996, the industry favored Republicans over Democrats 68 percent to 32 percent and that party pattern has become the norm. In 1998, the giving was 70 to 30 percent in favor of Republicans; in 2000, 65 to 34 percent; and in 2002, 69 to 31 percent.

While the conventional wisdom has been that votes follow the money, the reverse may be true. Rep. Barney Frank (D-Mass.) has said, “Money follows votes” and insurance PAC experts agree with Frank’s assessment.

“It’s natural for money to follow the party in power,” explained PCI’s Grande. There are more Republicans in power now than a decade ago, so more are on the receiving end of donations. He says his organization does not look at whether there is a “D” or an “R” after a politician’s name but at votes and issues.

According to AIA’s Pusey and others, it should not be surprising that insurance monies favor Republicans, or at least conservatives. “If you’re looking for candidates who support fair regulation, competitive markets and introducing some rational thinking in our legal system, those tend to be Republicans,” she maintained.

Pusey said political contributions tend to “encourage officials to continue doing what they are doing” rather than getting them to change direction.

There is a “greater understanding and appreciation among Republicans” on insurance issues, so it makes sense they receive the bulk of industry funds, adds Winston.

IIABA’s Reidell says his PAC is “essentially bipartisan” but does have one “overriding rule” for contributions: the candidate must support the American Agency System. IIABA takes cues from its state and local affiliates (and, in a way, Tip O’Neill) —if a candidate for federal office has been a friend to independent agents during his or her state career, IIABA will probably help out.

In addition to weighing voting records, insurance interests are more likely to donate to politicians who sit on key committees for insurance legislation such as the House financial services or Senate banking panels, whether they are Republicans or Democrats, over politicians on committees without insurance jurisdiction.

Some observers contend that the industry’s sizable political purse reflects its growing interest in federal issues, including terrorism insurance renewal, and class action and tort reform, and streamlining how the industry is regulated.

On the health side, one of the larger issues for insurance companies has been Medicare legislation, passed by Congress and signed into law by President Bush in November 2003, and the drive to permit small businesses to form association health plans.

The PAC and individual contributions are not the entire story of what the industry spends to influence Washington politics. These funds are in addition to the $87 million that CPR estimates insurance companies and groups spend on lobbying in Washington, D.C. annually.

More on political contributions can be found at www.opensecrets.org.

This story originally appeared in the Oct. 11 print edition of Insurance Journal. That version includes charts showing the leading recipients of insurance industry political contributions.

Topics Carriers Legislation Agencies Washington Market Politics