Insurance Lobbyists on Front Line of US Reforms

Jesse A. Hamilton, Washington bureau manager
BestWire Services
A.M. Best Company, Inc.
March 22, 2010

In many congressional sessions, insurers focus on small bills, the kind of insider financial legislation that is barely discussed beyond industry circles. But on Capitol Hill now, the attention of insurers is largely on the same major efforts that are drawing the intense interests of politicians and the public.

The organizations that insurers and insurance professionals hire to make themselves heard have a special set of challenges. The groups and the companies they represent spent $164 million on lobbying in 2009. According to the Center for Responsive Politics, insurance is the second-leading lobbying spender.

BestWeek surveyed many of the insurance trade groups tasked with making arguments in the capital. Their responses reveal a session that isn't just busy in those big-ticket debates on health and financial reform, but also the industry-specific advocacy they usually pursue.

Often, the groups are trying to get a bill passed to accomplish their goals, but just as often, their success can be measured by "what we keep from happening that will be negative for our industry," said Blain Rethmeier, spokesman for the American Insurance Association. And Ben McKay, the Property Casualty Insurers Association of America's senior vice president of federal government relations, said his group would "gauge our success based on whether we secured the least and lightest legislative touch to the property/casualty industry."


Property/casualty groups have tried to set up a line of defense against inclusion in the package of financial reforms debated in Congress. They have been successful in getting mortgage, title and credit insurers out of the oversight of a proposed consumer protection agency, but not in keeping the major companies from being grouped with financial services firms within the potential new systemic risk regulations. In all the debates, the crisis with American International Group Inc. has loomed heavily over the property/casualty business.

One success: medical liability insurers had been included in original bills on the antitrust exemption issue, but the most recent version that passed the House removed those property/casualty products from an effort really focused on health insurers.

This industry sector has also worked on such ongoing issues as the National Flood Insurance Program and disaster mitigation.

The sector's use of political action committee contributions is vigorous. The National Association of Mutual Insurance Companies said it doesn't just support helpful incumbents. "We engage in open and challenger races and seek to affect the outcome of every competitive race," said Jimi Grande, senior vice president of federal and political affairs.


America's Health Insurance Plans has been the most frequent defender of health insurers, who have been singled out for direct criticism in the debate over health care reform. The insurance side -- which said it supports reform, but not unless it demonstrates a reduction of medical costs -- worked hard against issues like the proposal for a government-run insurer, known as the "public option," which has been tossed out of current proposals.

When Senate Democrats lost their 60-vote block and their ability to bypass a filibuster against their health care reform, health insurers and their associations went a bit quiet. But groups such as AHIP returned to the debate as congressional Democrats decided to pursue parliamentary procedures the push the reforms through.

The health insurers may be close to losing a battle to keep their antitrust exemption. A bill that would take it away has already passed the House with bipartisan favor and is awaiting Senate action.


In the health reform debate, producers have focused on agents' role in health insurance. For the Independent Insurance Agents & Brokers of America, that means "protecting the role of the independent agent and broker as trusted advisers to health care consumers."

The House again passed two bills that this sector championed before: the Nonadmitted and Reinsurance Reform Act, which would reform tax remittance and regulation of multistate surplus lines transactions, and the National Association of Registered Agents and Brokers Reform Act, which would establish licensing reciprocity for producers who work in multiple states. On the NRRA success, the Council of Insurance Agents & Brokers said it's taken five years to build consensus for enacting the law, "and we feel very optimistic that we finally will have the opportunity to get this legislation to the finish line."


Life insurers are keeping a careful eye on tax treatment of life insurance products and spending time championing products like annuities.

"In its recent report, the White House's Middle Class Task Force called for promoting the availability of annuities to help Americans secure their retirements," said Whit Cornman, spokesman for the American Council of Life Insurers, which counts this development as a chief success. The Obama administration has also been inquiring as to how annuities might bolster retirement plans.

The Association for Advanced Life Underwriting is focused on estate-tax reform and thinks progress is being made. The next goal is a $3.5 million exemption with a 45% top rate, and if it doesn't happen this year, "Congress will be favorably disposed toward such legislation in 2011," said James E. Lee, vice president of marketing and communications.


The Reinsurance Association of America, which has testified at recent Capitol Hill hearings, is aiming for the passage of financial regulatory reform that includes "federal authority to enter international agreements with U.S. trading partners." Depending on what happens with reform negotiations in the Senate, that idea may be getting traction.

But reinsurers are leery of legislation that could establish a federal fund for natural catastrophes that could take the place of some private reinsurance business. The RAA is part of a group -- the SmarterSafer Coalition -- opposing such efforts.


Though it has no PAC and operates from a nonpartisan perspective, the American Academy of Actuaries has weighed in on health care reform, "urging that reform reflect actuarial principals" such as the inclusion of an individual mandate and other ideas that will "reduce adverse selection."

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