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Election 2014: How the Results Will Impact Insurers and Insurance Regulation

    Insurers will be impacted by the results of the 2014 mid-term elections in which Republicans gained control of Congress, captured the majority of governor races and otherwise turned the national political map red.
    Amongst that, three insurance commissioners were reelected Tuesday and a new commissioner will soon take office in Kansas.
    Because the vast majority of insurance commissioners are appointed by governors, there could be even more changes in the months ahead.
    Winning reelection were:
    • Democrat Dave Jones of California, who captured 53.6 percent of the vote in defeating Republican Ted Gaines (43.7 percent);
    • Republican Ralph Hudgens of Georgia, who captured 62 percent of the vote in defeating Democrat Ted Gaines (38 percent); and
    • Republican John Doak of Oklahoma, who was reelected without opposition.
    Kansas voters picked Republican insurance executive Ken Selzer over Democrat Dennis Anderson, 62 percent of the vote to 38 percent. Selzer is the managing director of Aon Benfield, a reinsurance intermediary and capital advisor.
    “Ken Selzer brings extensive experience to the position and will be an important contributor to NAIC deliberations,” The American Council of Life Insurers told Insurance Compliance Insight. “Ralph Hudgens, Dave Jones and John Doak have been active participants at the NAIC and their reelection ensures their voices in support of state regulation will continue to be heard.”
    Interestingly, it was the Democrat, and not Selzer, who had the support of Republican incumbent Sandy Praeger. The three-term commissioner, who didn’t seek reelection, said she crossed party lines because, “I would hate to see politics controlling the decisions in the insurance department,” according to published reports. “And that’s why I think it’s so important that we have an insurance commissioner that will be dedicated to good public policy and not use the office for political gain.”
    Praeger had also opposed fellow Republicans when she supported federal health care reform and fought against creating a nine-state health care compact favored by Selzer and the Republican governor.
New Governors Could Be Picking Their Own Commissioners
    Changes at insurance departments may not end with Selzer.
    The vast majority of insurance commissioners are appointed by governors, rather than elected, and 35 governor races – including 32 where the winner appoints the insurance commissioner – were up for grabs in the 2014 mid-term elections.
    “While there is some stability with the elected commissioners this [election] cycle, over the coming months there could be several new leaders of state insurance departments and agencies due to new governors being elected, new appointments and retirements,” said Paul Blume, senior vice president of state government relations for the Property Casualty Insurers Association of America.
    As many as 10 incoming state chief executives could pick new heads of their insurance department. Here are those details:
    • Alaska – Independent Bill Walker replaces incumbent Republican Gov. Sean Parnell.
    • Arizona – A new Republican, Doug Ducey, replaces outgoing GOP Gov. Jan Brewer.
    • Arkansas – The former Democratic governor will cede control to Republican Gov.-elect Asa Hutchinson.
    • Hawai`i – The governor remains Democratic, with David Ige replacing outgoing Gov. Neil Abercrombie.
    • Illinois – Republican incumbent Gov. Pat Quinn was roundly defeat by his Democratic challenger, Gov.-elect. Bruce Rauner.
    • Maryland – Long-shot Republican Larry Hogan captured53.8 percent of the vote in his upset win over Democrat Lt. Gov. Anthony Brown.
    • Massachusetts – Republican Charlie Baker defeated Democrat attorney general Martha Coakley to succeed outgoing Democratic Gov. Deval Patrick.
    • Nebraska – The governor’s office remains Republican, with Pete Ricketts replacing outgoing Gov. David Heineman.
    • Pennsylvania – Republican Gov. Tom Corbett was soundly defeated by Democrat Tom Wolf.
    • Rhode Island – Independent Gov. Lincoln Chafee leaves the governor’s mansion to incoming Democrat Gina Raimondo.
    • Texas – The governor remains a Republican, with Gov.-elect Greg Abbott replacing Gov. Rick Perry.
    “As the governors appoint new leaders we encourage them to select individuals who will make decisions based on sound principles of state-based regulation that promote a healthy, competitive marketplace for consumers and the industry,” Blume said. “This is of particular importance now as the NAIC tackles key international issues and will be critical to opposing the threat of international bank-centric regulation over the insurance industry.”
    Winning reelection in commissioner-appointing states were governors in Alabama, Colorado, Connecticut, Florida, Idaho, Iowa, Maine, Massachusetts, Michigan, Nevada, New Hampshire, New York, Ohio, Oregon, South Carolina, South Dakota, Tennessee, Vermont, Wisconsin and Wyoming.
    That means Connecticut commissioner Tom Leonardi should continue to be an active player for the NAIC in international forums for the foreseeable future, and Tennessee’s Julie McPeak should remain at the chair of the NAIC’s Life Insurance and Annuities (A) Committee, the ACLI noted. Wisconsin commissioner Ted Nickel, meanwhile, has announced his intention to stand for election on his own, for NAIC secretary-treasury.
    New Mexico Gov. Susana Martinez was also reelected, but she doesn’t directly appoint the insurance commissioner. A 2012 state constitutional amendment removed the insurance division from the Public Regulation Commission and created a stand-alone agency, The Office of Superintendent of Insurance. The legislation also created a nine-person committee that selects the superintendent. John Franchini is the current officeholder.
California Voters Turn Down Two Insurance Ballot Initiatives
    Two insurance ballot questions – Proposition 45 and Proposition 46 – both got the thumbs down from California voters.
    Prop 45 would have given the insurance commissioner the authority to pre-approve health insurance rates. Insurers said that would have give too much power to commissioner and would have had a negative impact on the state health insurance exchanges. Voters agreed, defeating Prop 45 by a 60- to 40-percent margin.
    Prop 46 would have increased the cap for medical malpractice lawsuits from $250,000 to an inflation-adjusted $1,1 million. Opponents said that would have raised med mal premiums and, ultimately, health care costs. More than two-thirds of voters agreed, and voted no.
Dissatisfaction Dominated the Political Discussion
    The results came in a mid-term election in which voters generally wished a pox on the houses of both political parties.
    According to exit polls released Tuesday and analyzed by CNN:
    • about 8 in 10 Americans disapprove of how Congress is handling its job;
    • nearly six in 10 voters are either dissatisfied or angry with both the White House and Republican leaders in Congress;
    • less than a third of Americans are satisfied with the Obama administration; and   
    • seven in 10 Americans said they were concerned about economic conditions.
    All of which helps explain why many incumbent politicians at all levels were on the losing end of the vote tallies. That included Democratic gubernatorial candidates who lost their campaigns in traditional blue states like Illinois – President Obama’s home state! – Maryland and Massachusetts. Also significant, every Democrat for whom Bill and Hillary Clinton campaigned went down to defeat – including candidates in their home state of Arkansas.  
    “Although this was another wave election, we anticipate facing continued challenges – regardless of who is in the governor’s mansion or who wields the gavel in the state houses across the country,” said PCI’s Blume.
    Those property & casualty state issues could include:
    • transportation network companies and the sharing economy;
    • auto body repair issues; and
    • a wide range of legislative proposals affecting workers compensation.
    For insurers, there’s work to be done.
    “PCI will be advancing an agenda for positive changes on important coastal insurance issues, strengthening building codes, e-commerce and addressing targeted no-fault auto insurance problems,” Blume promised.
    “Insurers will have to help new governors, legislators and state regulators better understand the essential role that a healthy, competitive insurance marketplace plays in keeping the nation’s economy moving forward,” he added.
Copyright 2014 ProBusiness Publishing LLC All Rights Reserved
Nov. 5, 2014
Insurance Compliance Insight is a general circulation weekly publication focused on insurance compliance and regulatory issues. Nothing within it should be interpreted as offering investment advice, legal counsel or other professional services. Subscribers can freely share ICI content within a subscribing company, but copyright law prohibits sharing content with those outside that company without written permission from the publisher. 

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