Posted on 08 Nov 2012 by Neilson
This year's election left Congress and the White House largely unchanged: Republicans maintained their control of the U.S. House, Democrats held onto the U.S. Senate and President Barack Obama won't have to move out of the White House.
But to those in the insurance industry, the so-called "status-quo" election brought a number of changes in individual races that could affect the approach Congress and the Obama administration take toward insurance regulation. In several key contests, members whom the industry long supported were defeated, meaning trade groups will have to up their education efforts to inform the new members about insurance issues.
Perhaps most notable is Rep. Judy Biggert, R-Ill., chairwoman of the House Subcommittee on Insurance, Housing and Community Opportunity, who became an industry favorite after demonstrating an ability to work with Democrats as well as Republicans to pass major insurance reform legislation, including the long-stalled five-year extension to the National Flood Insurance Program (Best's News Service, June 29, 2012). Across the insurance industry, trade groups said they were disappointed Biggert will not be returning.
"Judy Biggert was a true champion of the insurance industry," said Jimi Grande of the National Association of Mutual Insurance Companies. "I don't think anyone else could have gotten 406 votes in the House in support of the NFIP extension. She will be missed, maybe more than anyone else in Congress."
American Insurance Association President Leigh Ann Pusey struck a more reflective tone on Biggert's defeat, saying, "We will hate to lose Judy and will have to regroup. But we are well positioned on that committee with some other allies, so it's not devastating for us."
At the committee level, the House Financial Services Committee will also see some significant changes. Rep. Barney Frank, D-Mass, is retiring and will be replaced by Joe Kennedy III, a Democrat. The committee will also see a new chair in Rep. Jeb Henserling, R-Texas, who is taking over for term-limited Rep. Spencer Bachus, R-Ala.
Henserling "is an extremely intelligent man who asks tough questions of the industry. I expect him to be very engaged and interested in hearing our positions," Grande said.
In the Senate, another industry favorite, Sen. Scott Brown, R-Mass., failed to fend off Elizabeth Warren, a former Harvard law professor and consumer advocate, in his bid for re-election. Warren has often rankled the industry with her public calls for increased regulation of financial services companies. She was a fierce supporter of the creation of the U.S. Consumer Financial Protection Bureau and was Obama's original pick to head the bureau after it was included in the Dodd-Frank financial reform act.
Despite her concerns about some of Warren's positions, Pusey said she wasn't too worried about Warren's win because she "will have her sights on things that aren't completely insurance specific." However, Brown's departure has disappointed other industry representatives.
"We always liked working with Sen. Brown. He was very engaged in the process and was often an advocate for the industry's position on insurance issues during the Dodd-Frank debate," said Kimberly Dorgan, senior executive vice president for public policy at the American Council of Life Insurers.
That said, the insurance industry, which donated millions to congressional campaigns through out the election cycle, did see some of its most ardent supporters score victories on Nov. 6.
Sen. Jon Tester, D-Mont., for example, pulled out a win after a close race that wasn't decided until the morning of Nov. 7. After weeks of being too close to call, Tester's battle against Republican Rep. Denny Rehberg ultimately went in the incumbent's favor, with Tester receiving 48.6% of the vote to Rehberg's 44.8%. Libertarian Dan Cox took 6.5% of the vote.
"We're delighted that we will have Sen. Tester back next year," Dorgan said. "We don't look at party affiliation when we decide which members to support. We look at their approach to the industry, and he's always been very engaged and willing to work with us."
Now that the cast for the next Congress has largely been set (a few races in the House and Senate were still undecided by press time), the question facing the industry is what to expect from lawmakers during the lame-duck session as well as when the new Congress convenes next year.
The primary issue the industry is watching is the imminent fiscal cliff deadline, the point at which major spending cuts are to be implemented at the same time a number of major tax breaks are set to expire.
Charles Symington, of the Independent Insurance Agents & Brokers of America, said the tax aspect of the fiscal cliff is a major concern for his organization's members because many agent and broker businesses are taxed as individuals, so an increase in taxes could have a significant impact on their bottom line. "These businesses are staring down the barrel of major tax increases and they're coming at the end of the year, which makes it especially difficult."
The industry is also watching to see what the full implementation of the Dodd-Frank Act and the Affordable Care Act will look like.
Symington said that with Obama staying on as president, Dodd-Frank and Affordable Care Act regulations are likely to come more quickly and more often. "A lot of the regulations implementing those two acts were held until after the election," he said. "That's no longer the case, so they'll likely be released soon.
And then there is the Terrorism Risk Insurance Act, which is set to expire in 2014. Property/casualty insurers have made reauthorizing TRIA a top legislative priority.
"It will be interesting to see how Congress approaches TRIA, especially given both parties maintained control of their respective chambers," Pusey said. "We will make our case to Rep. Henserling, and we expect that he will be receptive to listening to our position. Either way, we're going to have our hands full for quite some time."