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With health reform long passed, and financial reform potentially a few weeks from reality, members of Congress are turning soon to a next priority: getting re-elected. From the perspective of the insurance industry, the major potential outcome of this year’s midterm elections is a dramatic narrowing of party balance on Capitol Hill — with a more remote possibility of a total change in which party controls the majority.
Either way, the parties will be forced to compromise more if they want to pass legislation, because the Democrats will almost certainly have less of a lead in the numbers.
“It is currently expected that Republicans will make significant gains in both chambers,” said Charles E. Symington Jr., senior vice president of government affairs for the Independent Insurance Agents & Brokers of America. “Smaller majorities for either party tend to lead to more pragmatic legislating, which is a good thing for the insurance market.”
As for specifics, insurers already know they are losing a key lawmaker who has worked closely with them in the past. Sen. Chris Dodd, D-Conn., is chairman of the Banking, Housing and Urban Affairs Committee in the Senate, and he spent his political career representing a state in which many major insurers are headquartered. Because Dodd decided not to run again, his chairmanship will be filled by a Democratic successor, if that party retains the majority. Next in line in seniority is Sen. Tim Johnson, D-S.D. According to the Center for Responsive Politics, the insurance industry has been the leading industry contributing to Johnson’s campaigns in the past five years.
But whoever replaces Dodd, they likely won’t have his relationship with the insurance business. “It’s unusual to have a Democrat that’s so supportive of the insurance industry,” said Robert Friedman, head of the insurance coverage practice at Gunster, Yoakley & Stewart in Florida. “You may not get that again.”
Richard Hylant, one of the principals of the Hylant Group and president of its Toledo, Ohio,-based operation, called Dodd “one of the most knowledgeable individuals on the insurance industry.”
Many other key insurance-impacting roles in Congress are likely safe, unless Democrats lose their majorities in each chamber. Such House of Representatives committee leaders as Reps. Barney Frank, John Conyers and Henry Waxman have easily won their most recent elections. Because Rep. Charles Rangel, D-N.Y., had been struggling under a series of financial controversies, he had been replaced recently at the helm of the House Ways and Means Committee by Rep. Sander Levin, D-Mich., who is currently acting chairman and who won his last race with nearly three quarters of the vote.
In the Senate, key committee chairmen like Tom Harkin, D-Iowa, and Max Baucus, D-Mont., aren’t up for re-election this year. Sen. Patrick Leahy, D-Vt., chairman of the Senate Judiciary Committee, does face a November election, but he’s expected to win his seat easily.
There has already been plenty of opening-round activity in the primaries and special elections around the country. But on an individual level, freshmen members of the House and Senate won’t find themselves with major sway on any of the chief financial committees, so the races that have produced new members or in which new members will be elected in November will probably have little initial effect on the industry.
One key incumbent, Rep. Paul Kanjorski, D-Pa., chairman of the Capital Markets, Insurance, and Government-Sponsored Enterprises Subcommittee in the House, just won his primary and will run against Republican challenger Lou Barletta, who Kanjorski has faced before in two different elections. In their most recent contest in 2008, Kanjorski won with a tight margin after a competitive race.
Earlier in this election cycle, Democrats were easily outpacing Republicans in donations from individuals and political-action committees connected to the insurance industry — an unusual statistic for an industry that has strongly favored the GOP for the past two decades. But in the most recent reporting, the parties are split almost evenly.
The Big I, which controls one of the largest insurance PACs, tends to give slightly more to Republicans, according to numbers compiled by the Center for Responsive Politics. It has shown its greatest favor in this election cycle to Rep. Carolyn B. Maloney, D-N.Y., chairwoman of the Joint Economic Committee, to whom it donated $10,000, and Sen. Richard Burr, R-N.C., the fourth-ranking Republican on the Senate Health, Education, Labor and Pensions Committee, who was given $8,000. The other insurance PACs are generally similar in their two-party giving.
Hylant thinks the Republicans have an opportunity to take back the House. “I think they’ve got a pretty good shot at it,” he said. “I do.” He is concerned about the economy and has been getting active in the political process for the first time in his life, he said — a trait he has also noted among other insurance professionals. “I’ve never been active in politics before the last couple of years,” he said, concerned about the business climate in the Midwest states that his full-service brokerage operates in. “We live and die by the strength of the economy in those states,” Hylant said. “I don’t have the option of saying, ‘Well, I’ll go make it in China.'”
Hylant has been disturbed by the major legislation coming out of Congress this year. “All they’ve done in general is layered on more government bureaucracy without addressing the key problems,” he said. “All I see are tax bills after tax bills come in that, as an employer, I can’t afford.”
As for those insurers with an interest in seeing the recent financial reforms expand into eventual federal regulation of the industry, Friedman said “if you lose some of those key incumbents, I think it kind of puts you back to square one to try to build that momentum again.” Anyway, he said, voters don’t seem that interested in insurance. “I’m not sure that there’s a popular ground-swell when it comes to the insurance industry,” he said. “They’re more concerned with banks than they are with insurance companies.”
(Jesse A. Hamilton, Washington bureau manager: Jesse.Hamilton@ambest.com)