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Seeing Blue

NAMIC Faces Challenge of Mass Turnover of State Elected Officials

By David B. Reddick, Ph.D.

The Democratic wind that blew through the states in November is likely to result in some very different legislative priorities in 2007.

"We could see unfavorable bills in states like Colorado, Maryland, Massachusetts, and Oregon where both the governor's office and state legislative chambers are controlled by Democrats," said Neil Alldredge, NAMIC vice president of state and regulatory affairs.

One issue likely to appear on the agendas of some lawmakers in 2007 is credit-based insurance scoring.

"In recent years, NAMIC and its industry partners have been successful at defeating attempts by some lawmakers to either severely restrict or prohibit the use of credit scoring, but this issue is likely to re-emerge, and especially if a major Federal Trade Commission study, now due for release in the first quarter of 2007, is perceived by lawmakers as being critical of the industry," said Alldredge.

Another issue is legislation related to natural disasters.

"In 2006, we saw attempts in states like Louisiana and Missouri to introduce bills that would seriously erode the industry's ability to manage its risks following natural disasters," Alldredge noted. "Although the 2006 hurricane season, for example, was milder in comparison to 2004 and 2005, this may not dissuade legislators from seeking to continually blame insurers for issues like affordability and availability of insurance as a result of natural disasters in their respective states."

This anti-industry sentiment could intensify if the inspector general's report from the federal Department of Homeland Security, due for release by April 1, is critical of the industry's efforts following Hurricanes Katrina and Rita.

"It's very possible that we could see both state and federal proposals advocating legislation to force insurers to offer all-peril homeowner's policies," noted Alldredge.

Alldredge also suggests that some positive natural disaster legislation is in the offing in 2007. Alabama lawmakers, for example, are expected to introduce legislation that would require building codes in the state's 10 most southerly counties. In Missouri, a push is being planned by a coalition of industry and business interests to have lawmakers adopt a resolution creating a task force to consider possible building code legislation in 2008.

Aside from the Democratic sweep, the 2006 midterm elections also have created some new challenges for NAMIC state affairs managers in terms of the number of new legislators among the 6,181 lawmakers elected on Nov. 7.

One factor contributing to that change was term limits. Prior to the election, a study conducted by the National Conference of State Legislators showed that 268 legislators in 13 states would leave office due to term limits.

In California, for example, where the Assembly lost 33 percent of its members and the Senate lost 30 percent of its membership, it resulted in both insurance chairs leaving office.

As Christian J. Rataj, NAMIC's state affairs manager for the Western United States, notes, this now means working with two new chairs, Sen. Mike Machado and Assemblyman Joe Coto.

"Senator Machado has previous experience with insurance issues as he was a sitting member of the Senate committee last year, but Assemblyman Coto, who also will be chair of the Latino Caucus, is more of an unknown." Rataj said. "He seems very interested in learning about the business realities of the insurance industry. The Personal Insurance Federation of California, a NAMIC state advocacy partner, is working closely with him and his staff to get them up to speed on the pending insurance issues."

Probably the most dramatic legislative turnaround came in New Hampshire where Republicans previously controlled both chambers. Democrats picked up five seats in the Senate to gain a 14-10 edge and won a whopping 89 seats in the 400-seat House.

While the gains in New Hampshire were undeniably significant, Paul Tetrault, NAMIC's state affairs manager in the Northeast U.S., says it is not clear what the impact will be on issues and policy.

"Democrats did not run on any kind of `Contract with New Hampshire,'" Tetrault said. "Polls did not show voters endorsing a state-level Democratic agenda, although the state party's chairman has cited goals such as increasing the minimum wage and spending on open spaces."

Alldredge said 2007 will be a challenging year for him and his staff, but they are ready to "educate" the new lawmakers on the issues important to NAMIC members.

State Elections At A Glance


Democrats won "open" races in Arkansas, Colorado, Iowa, Massachusetts, New York, and Ohio. In Maryland, Baltimore Mayor Martin O'Malley, a Democrat, upset Republican Gov. Robert Erhlich, the only incumbent to lose on Nov. 7. (Alaska's Gov. Frank Murkowski was upset in the Republican primary). Democrats now hold a 28-22 edge among governors.

State Legislatures

Democrats now control both legislative chambers in 23 states (see map) while Republicans control 15 states. Control is split in 11 states. Nebraska is non-partisan.

Attorneys General

Democrats have a 31-19 margin in attorneys general after wins in Kansas, Nevada, and Ohio. In Delaware, Democrat Beau Biden, son of U.S. Sen. Joseph Biden, won, succeeding an interim attorney general appointed to fill an unexpired term previously held by a Republican. And, in Wisconsin, Republican J.B. Van Hollen won the seat formerly held by Peg Lautenschlager, who lost the Democratic primary.

State Judicial Races

In state Supreme Court races, only two upsets occurred. In Alabama, Judge Sue Bell Cobb, a Democrat, beat Republican incumbent Chief Justice Drayton Nabors, Jr., while Justice Nancy M. Saitta won over Justice Nancy Becker in a non-partisan contest in Nevada.

Ballot Measures Defeated in Oregon and South Dakota

NAMIC and the insurance industry scored two major victories on Nov. 7 when voters in Oregon and South Dakota soundly defeated two ballot measures that would have been detrimental to the industry.

In Oregon, nearly two out of three voters rejected Ballot Measure 42, which, had it passed, would have completely banned the use of credit scoring in insurance underwriting and/or claims adjusting for all lines of insurance written in the state.

NAMIC was part of a broad-based coalition of businesses that created Oregonians Against Insurance Rate Increases to educate voters about the legal and practical implications of the ballot measure.

"Although the defeat of Ballot Measure 42 is a victory for the Oregon insurance market and provides the national insurance industry with another example of the reasonableness of using credit scoring in insurance underwriting, the results of the pending FTC study on the use of credit-based insurance scoring will be of far greater significance to this contentious debate than the results of the Oregon ballot measure," said Rataj. "Nevertheless, this success story should be enjoyed as a meaningful accomplishment and utilized in our continuing efforts to protect underwriting freedom."

In South Dakota, 89 percent of voters rejected Amendment E, a ballot initiative that sought to amend the state's constitution to dissolve judicial immunity for judges and ordinary citizens serving on all types of boards and commissions including county commissions, school boards, library boards, and professional licensing boards, as well as jurors and prosecutors.

"Despite nearly nine out of 10 voters rejecting Amendment E, it is not likely we have seen the last of the J.A.I.L. initiative," said Joe Thesing, NAMIC's state affairs manager for much of the north-central U.S. "Ron Branson (the originator of the ballot initiative) believes the initiative will take hold in one of several other states with active 'Jail4Judges' chapters."

NAMIC contributed financially to defeat both ballot measures.

Few Insurance Commissioner Changes in States

State midterm elections generally result in a whole new crop of insurance commissioners, but this year's class is expected to be smaller than in previous years.

Only six states - Arkansas, Colorado, Maryland, Massachusetts, New York, and Ohio - of the 36 states that held gubernatorial races this year saw a change in party control, thus setting up the possibility of commissioner appointments by the governors-elect. In Arkansas, though, Commissioner Julie Benafield Bowman is in the middle of a four-year appointment.

Of the five individuals elected insurance commissioner on Nov. 7, three of them - John Oxendine of Georgia, Sandy Praeger of Kansas, and Kim Holland of Oklahoma - were incumbents and easily won re-election.

The other two are political newcomers. Republican Steve Poizner, a successful Silicon Valley software entrepreneur, beat Lt. Gov. Cruz Bustamante to become California's next elected insurance commissioner.

"Commissioner Poizner has the business experience necessary to understand and appreciate the business challenges and realities of the insurance industry," said Rataj commenting on Poizner's victory. "NAMIC is excited about the prospect of forging a solid professional relationship with the new commissioner and assisting his department in developing a regulatory environment that promotes free-market competition and rate modernization."

In Florida, Adelaide "Alex" Sink became the only Democrat to win statewide office on Nov. 7 when she became the state's next chief financial officer. In that role, Sink, a former banking executive, will have oversight of the Office of Insurance Regulation among other duties.

"NAMIC is anxious to get to know CFO Sink and work with her on the ongoing property issue in her state and the sunset in 2007 of the state's no-fault law," said Liz Reynolds, NAMIC state affairs manager for the Southeast U.S.

As of early December, three appointed commissioners not expected to leave announced their departures. They are Maine Insurance Superintendent Allessandro A. Iuppa, who also served as president of the NAIC in 2006, Commissioner Jorge Gomez of Wisconsin, and Tennessee Commissioner of Commerce and Insurance Paula Flowers.

David B. Reddick, Ph.D. is associate director - public policy at NAMIC. He can be reached at

Posted: Thursday, January 18, 2007 12:00:00 AM. Modified: Thursday, January 18, 2007 1:49:09 PM.

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