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Election expectations: New Jersey and Virginia are in the gubernatorial election spotlight this year, but legislative races in those states may affect insurance more.

As elections go, this year's represents a breather from last year's high stakes and next year's heavy load of gubernatorial and insurance commissioner races.

This year, there are no commissioner races, and gubernatorial elections only in New Jersey and Virginia. But trade organizations are keeping their antennae up and will seek opportunities to work with newly elected officials.

"It's sort of the eye of the hurricane," said J. Bruce Ferguson, senior vice president of state relations with the American Council of Life Insurers. "Last year, there was a tremendous amount of activity and change that came with it. Next year will be the Super Bowl of governors' races, with 38 states electing governors."

In New Jersey, Democrat Jon Corzine faces Republican Douglas Forrester for governor.

In Virginia, the race is between Democrat Tim Kaine, the current lieutenant governor, and Republican Jerry Kilgore, formerly attorney general. Independent Russ Potts, is also on the ballot. Virginia will also elect a lieutenant governor and an attorney general. In Virginia, the state Legislature elects commissioners to a state commission with oversight of regulated businesses, including insurance. The entire House of Delegates (the lower house of the Legislature) is up for election.

New Jersey

What's at Stake

* The state's governor appoints the attorney general, insurance commissioner, heads of government departments and state Supreme Court justices. The state's governor is widely considered the most powerful in the nation.

* Among the electorate and the candidates, insurance issues rate low this year behind property-tax relief, government spending, ethics and education.

* Legislative elections could influence changes in the state's verbal threshold law.

Gubernatorial Race

* Jon Corzine is in the fifth year of his six-year U.S. Senate term. He was an executive with investment banking firm Goldman Sachs.

* Douglas Forrester is a former mayor of West Windsor, N.J., and founder of BeneCard Services Inc., which sells prescription drug coverage through employers.

* Senate President Richard Codey, a Democrat, has been acting governor since November 2004, filling out the term of Democrat James McGreevey.

Legislative Races

* Voters in New Jersey also will elect -all 80 members of the Assembly, its lower house in the Legislature.

* Currently, Democrats outnumber Republicans, 47 to 33. Democrats also control the Senate.

New Jersey Issues The Verbal Threshold

* Though Democrats are expected to retain control of the Assembly, the outcomes of individual races could affect a legislative initiative to return some teeth to the state's verbal threshold law, which was weakened by a recent state Supreme Court decision.

* The verbal threshold is an option buyers of auto insurance may choose to lower their premiums. In return, they forgo their ability to sue for noneconomic damages unless the injuries they suffer have a serious impact on their lives. The court ruled the serious-impact language does not apply.

* Before recessing this summer, legislators introduced four bills to reverse the court decision, two in the Assembly and two in the Senate. Three were sponsored by Republicans, one by a Democrat.

* The significance of verbal threshold: "This is an important issue to us," said Richard Stokes, a regional manager with the Property Casualty Insurers Association of America. "It may be a small, technical part of the law, but it has a significant impact."

* PCI supports the bills, though there are nuances, Stokes said. The bills would die if a reconvened Legislature does not vote on them by the end of the year, and Stokes said the PCI would like to see them reintroduced in the next session, if necessary.

Aftermarket Auto Parts, Medical-Malpractice Cap

* The industry also is supporting a bill that would make it easier for insurers and consumers to use aftermarket auto parts, Stokes said.

* The Legislature has been unable to move legislation to cap medical-malpractice court awards. Trade associations hope that new members might improve chances of a cap.

Tort Reform

* Gretchen Schaefer, spokeswoman for the American Tort Reform Association, said that when Corzine became a U.S. Senator, the association was hopeful because he was coming from the business community, but he has voted against the Class Action Fairness Act and not supported medical-liability reforms. There is no voting record for Forrester, but he has indicated support for tort reform in his speeches and remarks, Schaefer said.


What's at Stake

* Legislative races may affect the insurance business more than the governor's race because legislators deal with insurance "nitty gritty" in their, said Anne Leigh Kerr local counsel for the American Insurance Association.

* Every seat in the House of is up for election. It is now controlled by Republicans. Ferguson of ACLI said he doesn't see much of a shift in insurance landscape as a result of this year's elections.

* The governor is not as strong as in many states. The governor serves a single four-year term.

* A great deal of power is vested in the Virginia State Corporation Commission, which is headed by three commissioners elected by the state General Assembly and serves staggered six-year terms. The General Assembly includes the House of Delegates and the Senate.

* The State Corporation Commission has a staff of nearly 600 and is vested with regulatory authority over utilities, insurance, state-chartered financial institutions, securities, retail franchising and railroads. Virginia's insurance bureau is a division of the commission, and the insurance commissioner is appointed by and serves at the pleasure of the commission. The commissioner is currently Alfred W. Gross.

* "Al Gross has been with the department for quite some time," said Ferguson. "We don't see that changing. He's knowledgeable and expert in insurance issues, and having him at the helm brings stability."

Gubernatorial Race

* Democrat Mark Warner, the current governor, remains popular but cannot run for re-election.

* Tim Kaine, the Democrat, is tying himself to Warner, especially his record of large budget cuts that managed to protect core services.

* Jerry Kilgore came out strongly against tax increases last year as part of a movement that ultimately led to the state lowering some taxes. His tax stance is part of his campaign.

Additional Races in Virginia

* For attorney general, Republican Bob McDonnell faces Democrat Creigh Deeds. For lieutenant governor, Democrat Leslie Byrne faces Republican Bill Boiling. They reportedly hold similar positions on campaign issues as their party's gubernatorial candidates.

* The AIA is enthusiastic about McDonnell, whom Taylor Cosby, vice president of the Mid-Atlantic Region for the association, called a "champion of tort reform" as a House Delegate (member of the legislature) since 1992. Most recently, he was chairman of the legislative committee on courts and justice, a seat he resigned to run for attorney general. Cosby said his resignation leaves one less committee vote in favor of tort reform.

* Schaefer, of the American Tort Reform Association, said McDonnell has been "incredibly supportive of our issues" and that Kilgore also has repeatedly called for tort reform. She said that while Virginia is not a medical liability "crisis state" a number of obstetricians/gynecologists in northern Virginia are no longer delivering babies, and premiums are continuing to increase.


Ballot Issues

Several being pushed by Gov. Arnold Schwarzenegger are interesting because they are part of his overall reform agenda, said Ferguson. Whether they pass will determine his success and whether he will choose to run again, he said. One of the most significant is a budget reform act that is designed to bring some fiscal discipline to the state budget and force the state to live within its means. "To the extent there is in place through the constitution some safeguards against deficit spending ... you protect against the possibility of tax increases and premium tax increases," said Ferguson. "So from our perspective, it is the most interesting and important reform initiative out there."

Looking 2006

"Next year, with a whole new group of governors coming in, there is a potential for a whole new group of regulators. What happens is you have to start over and explain the reasons why a uniform, efficient system of regulation makes sense, and how the interstate compact could provide a tremendous benefit in the area of speed-to-market and product filing," Ferguson said about ACLI's push for more use of an interstate compact.
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Title Annotation:Regulatory/Law
Author:Panko, Ron
Publication:Best's Review
Geographic Code:1U5VA
Date:Oct 1, 2005
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