The Democrats' dramatic takeover of Congress in last week's election will create a more consumer-oriented environment for the property-casualty insurance industry to cope with, but does not derail the industry's agenda–and could actually bolster support on key issues such as federal terrorism insurance, lobbyists for the business believe.

Election Day handed clear control of the House of Representatives to Democrats, with a razor-thin victory in Virginia's U.S. Senate race giving Democrats a slim majority in the upper house of Congress as well.

“Under pressure from his constituents,” Rep. Barney Frank, D-Mass.–who will become chairman of the House Financial Services Committee–”will have a more consumer-oriented agenda,” said Carl Parks, senior vice president for governmental affairs at the National Association of Mutual Insurance Companies.

Indeed, he warned, even the controversial issue of alleged redlining by insurers could be examined again–perhaps not in the Financial Services Committee, but by other committees interested in various consumer issues.

“There is no doubt that the insurance agenda in a Democratic-controlled Congress will be more consumer-oriented,” agreed Charles Symington, senior vice president of government affairs and federal relations for the Independent Insurance Agents and Brokers of America.

Joel Wood, senior vice president for federal government relations at the Council of Insurance Agents and Brokers, also said that Rep. Frank will be much more attuned to the “consumer” agenda than during the years of Republican rule. “Any insurance regulatory reforms will be viewed through the prism of consumerism,” he predicted.

However, he added that he believes bipartisanship will continue to prevail in negotiations for new regulatory legislation out of the House Financial Services Committee–and, likely, in the Senate Banking Committee as well.

“The good news for us in the Senate is that Sen. Chris Dodd, D-Conn., who is very familiar with our industry and our issues, is going to be the chair of the Senate Banking Committee,” said Julie Rochman, senior vice president of government affairs and federal relations at the American Insurance Association.

The National Association of Professional Insurance Agents cautions that a Democratic-controlled Congress might alter the agenda on Capitol Hill, “but losses for the industry are not a foregone conclusion,” said Len Brevik, PIA's executive vice president and CEO.

“The more things change, the more they may remain pretty much the same,” he said, explaining that, while at first blush “some might be tempted to conclude that Democrats controlling Congress will be a negative for the insurance industry and for independent insurance agents, that may not be entirely the case.”

Specifically, noted Pat Borowski, PIA senior vice president, the election has moved Congress to the center. “This election has brought in more moderates on both sides of the aisle,” she said. “That tends to permit a more balanced consideration of our issues.”

She explained that “historically, insurance has fared better during times of centrist, results-oriented leadership. Since it is our job to achieve positive results for our members, we need to work effectively with both sides to achieve results favorable for our issues.”

Among the key insurance issues likely to be impacted by the seismic political shift in Washington:

NAMIC's Mr. Parks said insurance regulation will be a key topic on the congressional agenda in the next Congress.

However, whether legislation creating an optional federal charter or something more like a federal standards proposal–the State Modernization and Regulatory Transparency Act–will prevail, is unclear. SMART lost its champion–Rep. Mike Oxley, R-Ohio, current chair of the committee, who did not seek re-election and is leaving Congress.

While hearings are likely, Mr. Parks said, because the industry is divided over regulatory reform, Congress is likely to be hesitant to get involved in something now dominated by the states.

CIAB's Mr. Wood said that while Rep. Frank has been open to the notion of an optional federal charter for life insurers–and potentially commercial property-casualty–”he has indicated an extremely strong rejection of personal lines rate deregulation or a personal lines federal charter.”

Mr. Wood said that in two recent meetings with Rep. Frank, “he indicated that the surplus lines reform legislation is an example of the kind of bill where we've already worked things out,” and he would anticipate moving them through the committee again next year.

However, IIABA's Mr. Symington said that “in the state-vs.-federal regulation debate, industry proponents of an optional federal charter should think twice before pushing such a proposal in the 110th Congress. Senior members of the Democratic caucus have already expressed interest in reforming the McCarran-Ferguson Act, which very easily can turn into mandatory federal regulation rather than optional federal regulation.”

He called this dynamic “a perfect example of being careful what you wish for, because the industry will not achieve deregulation at the federal level.”

Mr. Parks also sees the potential for more oversight hearings in the House, where Rep. Luis Gutierrez, D-Ill., is the presumptive head of the House Financial Services Oversight Subcommittee.

Mr. Parks pointed out that Rep. Gutierrez was the primary sponsor of legislation mandating a Federal Trade Commission study of the use of credit scoring in setting rates for financial services transactions. The study was due this fall, but the FTC is now saying it is unlikely to be completed until spring, Mr. Parks noted.

Because of the presence of Rep. Gutierrez, and the fact that other committees might seek to examine insurance-oriented issues, Mr. Parks said he also anticipated greater scrutiny of such issues as mold, the industry's federal antitrust exemption under the McCarran-Ferguson Act, data security and privacy.

NAMIC's Mr. Parks sees Democratic control of the House as a positive for extension of the Terrorism Risk Insurance Act, set to expire on Dec. 31, 2007. He also expects more sympathy for creation of a long-term, public/private partnership to deal with catastrophic risk issues.

CIAB's Mr. Wood echoed Mr. Parks' view on TRIA renewal. “We expect the terrorism reinsurance issue to again gather bipartisan support in the Financial Services Committee,” he said, adding that “if anything, Democratic control of the House likely will make the TRIA reauthorization issue less bumpy from a leadership standpoint.”

Sen. Patrick Leahy, D-Vt.–who would likely head the Senate Judiciary Committee under Democratic control–co-sponsored a bill creating an alternative claims-handling process for victims of asbestos in the workplace with Sen. Arlen Specter, R-Pa., the committee's current chair. The bill failed to win enough votes on the Senate floor to continue with debate.

However, Julie Rochman, senior vice president of government affairs and federal relations at the American Insurance Association, said it is “unclear if asbestos will come up” in the next Congress in any substantial way.

She added that while there is “no doubt the [Democrats] will have an agenda, they haven't disclosed it in detail, so we don't know if asbestos will be on their must-do lists,” noting that traditionally, Democrats have been less inclined to take on tort reform issues.

However, she added that asbestos is somewhat different, “because people who aren't sick are being compensated under the current system, and people who are sick from asbestos are either getting pennies on the dollar or nothing at all.”

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