Editors' Cuts

Will Election Results Roil the Regulatory Landscape?

Bill Kenealy
Insurance Experts' Forum, November 4, 2010

There is little doubt that the results of the midterm elections will reverberate throughout the insurance industry.

The real question is how much and where. While the breadth of the Republican victory is impressive (60 seats and control of the House of Representatives and 6 seats in the Senate), it is still probably insufficient to repeal the two recent landmark legislative actions, the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Patient Protection and Affordable Care Act.

Indeed, considering the fact the Democrats still control the Senate and the White House, Speaker of the House-elect John Boehner’s stated goal of repealing the health care reform bill in its entirely seems like posturing. In a similar vein, the desire of Rep. Scott Garrett (R.- N.J.) to thoroughly alter the nature Dodd-Frank, including dismantling the newly minted consumer protection bureau before it gets off the ground, can only be seen as slightly less quixotic.

With President Obama acknowledging he is amenable to “tweaks” to health care reform, what does seem likely is that Republicans will be able to exact some minor concessions from Democrats. Considering the political reality, anything bolder emanating from the House will ultimately result in gridlock.

With major changes thus unlikely, what will undoubtedly change is the human terrain on Capitol Hill. Spencer Bachus, (R-Ala.), who is the lead candidate to take the Financial Services Committee gavel from Barney Frank, is seen as favoring targeted reforms over wholesale changes. Garrett, who will likely chair the Capital Markets Subcommittee, is well versed in insurance issues and was recently presented the Federal Legislator of the Year Award by the National Association of Mutual Insurance Cos.

Given the low odds for repeal, many in the insurance industry are rightfully focusing attention on the implementation and rule-making phases of HCR and Dodd-Frank.

“Most immediately, AIA's efforts will remain focused on implementation of the Dodd-Frank financial reform legislation,” Leigh Ann Pusey, president and CEO of the American Insurance Association (AIA), said in a statement.

Despite Dodd-Frank’s creation of a Federal Insurance Office, insurance will remain predominantly legislated at the state level. Accordingly, the eight governships and 16 state legislative bodies Republicans wrested from Democrats may well birth a more immediate challenge for the industry.

“There remain about two dozen yet-to-be-named state insurance regulators who will be appointed in coming weeks,” Pusey said. “While each state is unique, the overall legislative environment should improve as states will be more likely to foster an environment that understands the issues facing the business community.” 

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