The Jack Abramoff lobbying scandal in Washington, D.C., has prompted many to question the appropriateness of legislative lobbying that has become so much a part of American politics.
California leads the nation in money spent for lobbying, according to a recent editorial criticizing the lobbying process. In 2004, lobbyists in California spent $212 million. That figure dwarfs the closest lobbying state, Texas, by $50 million and third-place New York by almost $70 million. In only one of the remaining 47 states – Minnesota – did lobbyists even reach the $50 million-mark.
What is the best way to give Americans a voice in the political process? I do not pretend to know to what the solution is to that fundamental question. I only know the reality – effective politically advocacy is essential for American businesses.
Since the founding of this country, Americans have organized themselves around issues of common concerns and worked to find solutions to problems that impede their ability to make a living and provide a service to consumers; there is nothing nefarious about that. In fact, it is the path to social progress. The tragedy of the Triangle Shirt Waist Factory Fire of 1911 led to the establishment of workers’ compensation insurance and workplace safety programs.
When you examine the amount of money being spent on lobbying, it is clear we have to be willing to commit serious resources to the effort to be effective. Insurance industry adversaries certainly are.
The trial bar raises $10 million per year for political contributions. Labor unions and public employee groups also have millions of dollars raised from member dues to spend on campaigns and initiatives.
Agents and brokers have consistently said political advocacy is the most important benefit the association provides to their businesses. We take our responsibility to be their voice in Sacramento, Calif., and Olympia, Wash., very seriously, and we have spent considerable resources over the years to assemble a top-notch, professional advocacy team. Our association members and staff including full-time legal counsel and grassroots coordinator, and as well as political action committee, IBApac, work hard to help make sure the industry’s messages are heard.
We realized a long time ago that we cannot outspend our opponents. We know that we must work with the business community on issues that affect the state’s economy – not just insurance issues. We encourage similar efforts in other states.
In 2003, the California First Advocacy Fund was created and capitalized with $500,000 to aggressively work for workers’ compensation reform. The money was invested in coalition building, media relations and research. That gave insurance agents and brokers – and their clients – a seat at the table and a voice in the reform debate. Many of our members’ clients provided invaluable testimony to the legislature on how the marketplace really works.
Although the insurance industry’s resources are small compared to those of the trial bar, we were welcomed as a coalition partner in the broader business community. We have invested significant resources in initiative campaigns on issues such as health insurance, tax and budget reform, and closing a loophole in regulations that were permitting hundreds of baseless lawsuits against small businesses. We also have been an active participant in the California Chamber of Commerce’s political action committee to elect more pro-business candidates to the legislature.
Those partnerships served us in good stead when we have had to defend ourselves, such as after New York Attorney General Eliot Spitzer indicted Marsh for alleged bid rigging. We knew that California Insurance Commissioner John Garamendi was wrong when he tried to jump on the Spitzer bandwagon, saying the industry was rife with corruption. Now Garamendi knows that too.
His investigations turned up nothing. Garamendi’s efforts to promulgate regulations that made no sense were defeated in the administrative process and the legislature. Once his office reviewed the “IBA West Guide to Disclosure,” the Department announced that it was no longer going to pursue disclosure regulations. It was an incredible victory for the entire industry.
The disclosure issue went to the heart of the relationship we have with our customers, a relationship built on trust and fair dealing. We and the insurance industry were able to prevail because we have made ourselves known in the business community and in the legislature. That is the result, I believe, of years spent working with the legislature to solve problems.
Each year, the challenges our industry faces are great. We know the applicants’ attorneys are well organized and highly motivated to turn back the clock on workers’ compensation reform. Proposition 103 rating criteria for auto insurance has re-surfaced. And disclosure still remains a concern, if not legislatively, certainly as a legal liability.
Fortunately, we can build on the work we have done. We are committed to re-capitalizing our advocacy efforts. We also have partners in the business community who will stand with us.
Prepare yourself for the challenge. Make no mistake; that challenge is coming.
Stewart Sawyer III is president of IBA West, as well as vice president and actuary, director of market security for Acordia Inc. in Seattle. To get involved with IBA West’s grassroots efforts or contribute to its advocacy fund, contact Shirley Rosenberg at srosenberg@ibawest.com.
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