Report says insurers are tops in the financial sector with their lobbying totals. What is the industry getting for its money?
By MATTHEW BRODSKY, senior editor/Web editor of Risk & Insurance®

Insurers dropped about $1.1 billion to lobby on Capitol Hill in the last decade. That's the most out of any sector in financial services, the other sectors being commercial banks, securities firms and accounting firms, according to data in a March report from an organization called Wall Street Watch.


The industry dispatched 1,219 individual lobbyists in 2007 alone, nearly one-third out of the total 2,996 guns hired by financial services interests. It also contributed more than $220 million to federal campaigns, out of the total $1.738 billion given by financial services as a whole.

These figures do not surprise some familiar with how Washington works.

"They're pouring tons of money into the political process," said Mike Ferguson about insurers. "They are clearly active, and they are clearly connected and participate fully in the political process."

Ferguson is chief operating officer of the Self-Insurance Institute of America Inc., an organization that represents employers and vendors in the alternative risk transfer industry. Incidentally, when speaking with Risk & Insurance®, Ferguson was attending a SIIA meeting in Washington, D.C., where members held more than 300 congressional appointments.

"We're hot on the scene," he said, though he added that the ART industry needed to catch up with the traditional insurance market's lobbying effort. On certain issues--such as healthcare or risk retention groups--carriers "certainly are not going to be looking out for employers," he said, either out of different interests or simply indifference.

"Regarding our property and casualty insurance lobbying activities, we work hard to advance public policy positions that promote competitive insurance marketplaces," said Jeffrey Brewer, spokesman for the Property Casualty Insurers Association of America.

P/C SUCCESSES

Some property/casualty insurers might chafe at the notion that they're putting a full-court press on Congress. Bob Detlefsen, vice president of public policy at the National Association of Mutual Insurance Companies, made it clear that, if one were to parse those numbers, it probably would turn out that health insurers paid for most of that lobbying, not the P/C side--by factors of "some magnitude."

(The Wall Street Watch report did not break out separate numbers for the P/C, life and health sides of the industry.)

Yet, P/C carriers did have reason to lobby and be involved in lawmaking in the last decade.

"The thing that's probably been most important to us in the last five years was the terrorism insurance issue," he said, noting how insurers worked to get the Terrorism Risk Insurance Act passed following Sept. 11, 2001, and worked to get it extended in 2005 and 2007.

Another successful goal: the U.S. Class Action Fairness Act of 2005, which gave federal courts more jurisdiction over class-action lawsuits.

"Insurers were very much involved in that," Detlefsen said.

And let's not forget the teeny tiny issue of the optional federal charter, which if passed would theoretically allow carriers to choose a federal regulator instead of being governed by today's state-based regulatory system.

The federal charter has been a big target of dollars and has divided the industry's lobbying efforts. NAMIC opposes it, said Detlefsen, while other industry groups like the American Insurance Association support it. (The AIA declined to participate in this article.)

MONEY'S WORTH?

While some might wonder whether the insurance industry has gotten its $1.1 billion's worth, more spending could be needed in the near future. The main thrust of the Wall Street Watch report is to suggest that financial services firms lobbied for regulatory and legal changes that made their lives easier in the 1990s and 2000s ... but led to the financial collapse. (The title of the report is "Sold Out: How Wall Street and Washington Betrayed America.")

One such regulatory/legal change was the 1999 repeal of the Glass-Steagall Act, an action which, according to the report, large diversified insurers argued for along with the rest of the financial sector.

But now that the sky has fallen, the entire sector will face the backlash of increased regulation. More lobbying dollars might be needed to keep the screws from being tightened too much.




March 17, 2009

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