Power shift in the political landscape

With Democratic majorities in the House and Senate, we’ll likely see action on a number of insurance issues.

Although it took a little time for all the votes to be counted, the 2006 midterm elections saw a wave of Democratic candidates wrest control of both houses of Congress, gain a majority of the governorships and take control of more state legislatures than they have in a decade.

In the U.S. House of Representatives, Nancy Pelosi (D-8th Calif.) will likely become the first female Speaker of the House. She and the Democrats have made it clear that while Iraq is the number one issue on the agenda, other issues for the Democrats include raising the minimum wage, a new prescription drug plan and an end to the ban on stem cell research. Furthermore, the committee leadership will change and will reflect the priorities of their new chairs. For example, it is likely that Rep. Barney Frank (D-4th Mass.) will lead the House Financial Services Committee, and Sen. Chris Dodd (D-Conn.) will chair the Senate Banking Committee.

With Democratic majorities in the House and Senate, we’ll likely see action on a number of insurance issues. In particular, extension of the Terrorism Risk Insurance Act (TRIA) and reforms of the National Flood Insurance Program (NFIP), which have in the past received widespread Democratic support. In addition, insurance regulatory reform has been a subject of interest to Rep. Paul Kanjorski (D-11 Pa.), who is slated to become chairman of the House Financial Services Committee’s Insurance Subcommittee.

In the states, Republicans lost their hold on six governorships and now control power in 22 states compared to 28 for the Democrats. In these states where there has been a change at the governor’s mansion, we may see new insurance commissioners appointed. Additionally, in California, Republican Steve Poizner won the race for insurance commissioner and will have tough regulatory issues to deal with, including prior approval, auto rating factors and auto repair costs.

The governorship in Colorado went to Democrat Bill Ritter. Democrats also increased their majority in both the House and Senate. For the first time in nearly 50 years Democrats control Colorado’s government. The Democrats’ sweeping victory will impact key industry issues including no-fault auto insurance reforms, credit scoring, workers compensation reforms and tort reform. Governor-elect Ritter, former Denver district attorney, has already announced his support for medical mandates on auto insurance.

In Florida Attorney General Charlie Crist (R) won the governor’s race to keep that office in Republican hands, while former NationsBank Florida President Alex Sink (D) won the post of chief financial officer, placing the first Democrat on the cabinet since its reorganization. With these changes, it is too early to determine if Commissioner Kevin McCarty will be reappointed.

Party control in the Indiana Senate remains unchanged with the Republicans controlling the majority. While there was no tsunami, the Indiana House will be controlled by the Democrats. However, we do anticipate this change will force the insurance industry to intensify its lobbying efforts to move regulatory modernization and taxation reform forward.

As expected, New York Attorney General Eliot Spitzer was victorious in his governor’s race. Economic development is a key priority for Spitzer and a healthy, competitive insurance market is an integral component of successful economic development efforts. Spitzer has also identified reforming New York’s dysfunctional workers’ compensation system as an important element of his economic development plan. Workers’ compensation reform is a priority and we look forward to working with Spitzer to achieve this goal as well as other measures to promote a healthy competitive insurance marketplace in New York.

Oklahoma Governor Brad Henry (D) won re-election and Insurance Commissioner Kim Holland (D) weathered a serious negative TV campaign to prevail in her race. Republicans managed to hang on to control in the House and picked up a few seats in the Senate to achieve a tie in that chamber. The Republican gains in the Senate may provide a slightly better chance to pass UM/UIM legislation that was blocked by the trial bar in the Senate this past session, but passage of this bill will still be difficult.

With the changes brought by the 2006 elections, it will be important for the insurance industry to have a strong voice on Capitol Hill and in the state houses across the nation. Decisions made by legislators and regulators have profound impact on insurance industry’s ability to operate efficiently and effectively. It is vital that elected officials understand the role insurers play in the nation’s economy. Insurance is one of the most heavily regulated – and often times misunderstood – industries in the nation. Because lawmakers cannot be experts on every issue, particularly one as complex as insurance, this is why it is so important for insurance professionals to participate in the political process.

As citizens, every one of us has an obligation to ensure that our elected officials are fully educated about all aspects of the laws they are considering. One vehicle that insurance professionals can use to communicate with state and federal lawmakers on key issues that impact the industry is the Property Casualty Insurers Association of America (PCI) advocacy Web site (www.insurersforaction.org). This Web site is designed to help property/casualty insurance professionals become politically aware, actively involved and have impact on public policy.

Michael Gilhooly is director of state political affairs for the Property Casualty Insurers Association of America (PCI). Gilhooly has wealth of experience advancing insurance industry issues with public policymakers. He manages PCI’s political involvement programs and strategic communications with public policymakers.