Election Impact on the Insurance Industry: More of the Same – A LOT MORE

Recent articles and opinions suggest that the recent election means a lot more of the same for the insurance industry – including a new flood of regulations.

A number of insurance industry observers and pundits have recently discussed the potential impact of the recent election upon the insurance industry and insurance regulation.

FIO is likely to play expanding role in insurance regulation

An article from Insurance Networking News, for example, suggests that the Federal Insurance Office (FIO) will likely play an expanding role in insurance regulation, particularly on the international front. The article quotes industry observers who agree, including the following comments from Peter Kochenburger, executive director of the Insurance Law Center at the University of Connecticut:

The federal government absolutely has the right to regulate insurance. That has been decided since 1944, but it has consistently declined the opportunity to do so. * * * It’s a long overdue office, but it has not exercised its jurisdictional authority in any kind of way that assumes it’s going to override the states.[1]

Kathy Burger, Editorial Director of Insurance & Technology, predicts that "for the insurance industry the results appear to be... more of the same."

With Barack Obama reelected, continuation of a Republican House and Democratic Senate, and the so-called "fiscal cliff" looming, it looks as if insurers will be facing pretty much the same kinds of challenges as before the elections. The Affordable Care Act will stay in place, meaning health insurers must navigate the transformation of their industry. Dodd-Frank isn't going away, which means stepped up efforts around reporting, risk management and navigation of "too big to fail" definitions. The world hasn't gotten any less risky, as evidenced by the devastation caused by Superstorm Sandy and this week's Nor'easter. And the competitive landscape in financial services continues to be unsettled, with new kinds of competitors and consumer-driven channels creating new opportunities for education, interaction and service.[2]

Healthwatch, the Hill's Healthcare Blog, seems to agree but also seems to emphasize more.

The new waiting game in healthcare isn’t about the political future of the Affordable Care Act, but rather the huge amount of work that still has to be done to implement it. As expected, the Health and Human Services Department is moving ahead quickly on several key regulations that had been held until after the election.

Since Election Day, HHS has submitted regulations to the Office of Management and Budget on essential health benefits, insurance regulations, wellness programs and quality initiatives.

* * *

With the healthcare law’s political future now assured, the focus over the next few months will be on the states and the rule-making process, and all signs indicate that a new flood of regulations is about to begin.[3]

Unfortunately, according to the Hill and Moody's, more of the same is not good news for insurers:

President Obama’s reelection is... bad news for insurance companies, according to the latest analysis from Moody’s. The Affordable Care Act “will have negative credit implications for insurers based mainly on the additional regulations and restrictions it imposes on insurers,” Moody’s wrote. [4]

PropertyCasualty360 also sees the status quo continuing, and that means that the Affordable Care Act (ACA) is here to stay. However, some insurance industry analysts suggest the health insurance exchanges required under the ACA may be delayed:

Beth Mantz-Steindecker, a health regulatory analyst at Washington Analysis, is suggesting that implementation of the exchanges may be pushed back because so few states are prepared to implement the program.[5]

Other implications of the 2012 elections on the insurance industry, according to the PropertyCasualty360 article, potentially include the following:

Designation of certain insurers as systematically significant by the FSOC could happen soon.

• The release of the FIO's report on proposals to modernize the regulation of insurance regulation is likely imminent;
• The Financial Stability Oversight Council will likely begin designating certain non-banks such as insurers as systemically significant, and potential insurer candidates include American International Group, MetLife and Prudential Insurance;
• Implementation of consolidated regulation of insurance companies which operate thrift holding companies will move forward, although it could be delayed due to insurer objections; and
• The Terrorism Risk Insurance Act may not survive, at least in its current form.[6]

1. Election Brings New Faces and an Expanding Role of the FIO, Chris McMahon, Insurance Networking News, November 8, 2012.
2. Impact of 2012 Election on Insurance: More of the Same?, Kathy Burger, Insurance & Technology, November 9, 2012.
3. Overnight Health: HHS Moving Quickly on Key Regulations, Sam Baker and Elise Viebeck, The Hill, November 12, 2012.
4. Overnight Health..., id.
5. The Election's Impact on Insurance Issues, Arthur D. Postal, PropertyCasualty360.com, November 7, 2012.
6. The Election's Impact..., id.