At this point in the election cycle, we would be traditionally talking about the elections in the past tense. But among the many unique and interesting aspects of the 2020 elections is that the outcomes are still coming in, and in meaningful ways. President-elect Biden is proceeding to plan for the transition and has started to name key officials, although President Trump continues to mount challenges unlikely to impact the outcome but with the potential to affect the transition. Meanwhile, Georgia’s two Senate runoffs in January will determine control of that chamber.
Nevertheless, the insurance industry, like all stakeholders, needs to plan and look forward. Our team has been doing so, and received some industry resources in the form of insights from a recent post-election roundtable, co-sponsored by the Networks Financial Institute at Indiana State University’s Scott College of Business. Here are some of the key takeaways from our forum, which brought together a diverse set of perspectives from across the insurance industry:
State Elections Point to Stability for Regulator Appointments
Gubernatorial races played out as expected, with all nine incumbents on the ballot winning. Montana’s Greg Gianforte (R) and Utah’s Lieutenant Governor Spencer Cox (R) captured the two open seats. The five insurance commissioners’ races also favored incumbents and yielded only one new official, Montana’s Troy Downing (R). And Democratic efforts to make inroads on state legislatures did not come to pass. What do those results add up to?
- The number of transitions is lower than in recent years. Given the number of complex regulatory initiatives under way, that could be a positive development.
- Our commentators noted several appointed regulator vacancies in key states — these transitions will still bring change that stakeholders need to consider and be prepared for.
- The new virtual formats for the National Association of Insurance Commissioners (NAIC) have the prospect of changing the pace of model law and regulation development.
Federal Elections Point to Divided Government (Pending Senate Outcomes)
Republicans in the House narrowed the Democrats’ majority. Under the House committee system, that means Republicans will gain seats on committees as ratios are recalibrated. The House Financial Services Subcommittee on Housing, Community Development & Insurance will see a new Chairman in the wake of the primary loss of Rep. Lacy Clay (D-MO.)
On the Senate Banking Committee (covering financial regulatory issues), Sens. Doug Jones (D-AL) and Martha McSally (R-AZ) lost their races, with David Perdue (R-GA) headed for a January run-off. We expect the new Republican leader will be Pat Toomey (R-PA), with Sherrod Brown (D-OH) continuing in the Democratic leadership role.
Key Issues to Watch
Our post-election panel identified and discussed key issues to watch as we adjust to change and new players, including:
- Climate Change: Regulator interest has been increasing over the past few years, with disclosure requirements already in place and the prospect of more developments. International regulators, states and the NAIC are already active, and we expect the Biden administration to add its voice.
- Department of Labor’s Fiduciary Rule: Expectations are for a Biden administration to take up its own rule that would impact duties around a fiduciary standard of conduct for financial product sales. However, the panel did not view such a rule as an item that would happen in the first hundred days, but rather that it might unfold over the first two years of the administration.
- Race & Insurance: The NAIC and its leadership have set up an executive-level Committee and five focused workstreams to advance progress on issues around race and insurance. Our forum discussed industry efforts to support those goals.
- Business Interruption: All our panels discussed the ongoing focus on business interruption insurance in the wake of the pandemic. Federal legislative efforts regarding some form of a backstop are likely to continue, but even then, there are significant details that would need to be determined.
- Corporate Tax: Our legislative panel did not anticipate immediate activity on corporate tax as we head into the new Congress and a new administration.