In Washington D.C., as well as state capitals around the country, consumer advocates say it’s getting harder to overcome spending by insurance interest groups and get their policy messages to the public.
There aren’t numbers readily available that show how much insurance spending has increased in state capitals, but the numbers at the federal level show an insurance industry stepping up. Insurance spending — which includes the auto, health and life sectors — on federal-level campaign contributions given by individuals has increased from $21.4 million in 2004 to $29 million in 2012. Meanwhile, other dollars flow from trial lawyers and associated groups with a direct stake in car insurance policies.
While the fact that money helps insurance and other interests gain access to politicians isn’t illegal, surprising, or even new, watchdog groups say the influx in political spending is making it more and more difficult to oppose legislation and other regulations that may hurt the consumer.
The result is that consumer groups, who often lobby on behalf of policyholders, are finding they have to pick and choose which battles they want to target.
“We see insurance influence at every turn, throughout the entire [legislative] session,” said Alex Winslow, president of the consumer group Texas Watch. “No consumer groups have the same resources, and many of us are non-profit, meaning we can’t spend money on certain types of lobbying or give to political candidates that support our causes.”
One example of this recently played out in Texas. In the state Senate, legislators considered a bill this year intended to implement a new consumer protection that would stop insurers from being able to raise rates on policyholders for asking their insurers hypothetical questions about their coverage.
The consumer protection was originally supposed to apply to fire, homeowners, and auto coverage. While the Texas legislature did pass a bill extending this protection to homeowners and fire insurance policyholders, they stripped the provision that would offer the same protection to motorists.
Texas insurance experts told Online Auto Insurance News (OAIN) that it was the insurance lobby that led the effort to kill that protection for auto policyholders.
Meanwhile, at the federal level, truckers from across the country threatened to slow traffic in Washington D.C., in part because of a Congressional proposal that would dramatically increase their insurance costs, along with other concerns about the future of their industry. While the threats were quickly withdrawn, the anger at the influence of special interest groups remains.
“The proposal should not be taken seriously,” spokeswoman for the Owner-Operator Independent Drivers Association Norita Taylor told OAIN in a statement. Taylor spoke on behalf of the trucking industry, and said the proposal was written by, and for, political special interest groups.
“The two groups supporting increases have much to gain if this bill is enacted as they are personal injury lawyers hoping to boost their profits and large motor carriers hoping to diminish their small-business competition,” Taylor told OAIN.
Still, insurance companies and their employees traditionally give money to influence policies affecting their business. Over the past two years, the industry has given more than $1.5 million to political candidates at the federal level, according to data provided by OpenSecrets.Org.
“If you really want to see some serious spending,” said Bob Hunter, director of insurance for the Consumer Federation of America, “look at the state level.”
While auto insurance companies, trial lawyers, and other interested groups may have an interest at the federal level when it comes to highway and safety regulations, the bulk of rules and regulations governing insurance happen at the state level.
And the spending reflects that.
In Florida, State Senate Insurance Chairman David Simmons (R) has received more than $129,000 dollars for his re-election campaign as of Oct. 10, with more than 11 percent of that money coming from individuals who work in the insurance or insurance services sector.
Other states see similar contributions. In California, Democratic State Senate Insurance Chair Ron Calderon raised more than $750,000 from January 2009 through December 2012, with $91,000 of that coming from insurance groups, according to maplight.org.
In California, the property/casualty insurance industry — which mainly consists of home and auto insurance companies — made the sixth-highest amount of political contributions out of all interest groups in the state from January 2011 through December 2012. The industry spent more than $2.02 million during that period.
And in states where insurance commissioners are elected, money tied to insurers flows freely to candidates. For example, in Georgia, more than 16 percent of the more than $14,000 in contributions collected by Republican insurance commissioner Ralph Hudgens this year came from GEICO executives and employees.
Meanwhile, groups that traditionally oppose the insurance industry, such as attorney groups, have also invested heavily at the state level to influence regulations. Take Tennessee, where trial attorneys have spent more than $1 million dollars the past eight years on backing candidates.
“What you see at the state level is money going to the party in power,” said Bob Hunter. As the former Texas Insurance Commissioner, Hunter said even more money is spent on retaining lobbyists and supporting insurance trade groups in the state that can speak at the capital for the industry as a whole.
“These special industry groups don’t hand money away for nothing,” he said. “At the very least, they want access to politicians and regulators.”
Hunter notes that the most common way to fight a bill supported by well-connected lobbyists is to take that message to the public through press conferences and news reports.
“The only way to counter a bad bill is to tell the truth,” Hunter said. “And that only works half the time.”
But with the declining power of local news organizations, consumer advocates are having a harder time getting that message out.
“We’re very concerned about the future of getting our message out to consumers,” said Texas Watch president Winslow. “Without media coverage, it’ll be much harder to counter the access insurance lobbyists receive here in Texas.”
While insurance companies and various lobbying firms did not return calls for comment for this story, politicians overseeing insurance policy have often noted that insurers and their lobbyists often lend expertise and a unique understanding of the market to regulators.
That can help government officials avoid pitfalls when they craft new policies.
Also, there’s nothing illegal about the political contributions, and Winslow noted that the practice of trading access for contributions is “ubiquitous across the country.”
“But it makes it harder to compete when lobbyists and other people with ties to the insurance industry have longstanding relationships and rapport with politicians and staff members,” he added. “It forces us and other consumer groups to punch above our weight.”
