With less than a month remaining before the 2016 elections, the electoral landscape remains unpredictable. While Republicans have the majority in both houses, recent polls suggest that this control could change in November, especially in the Senate. Because neither party will want to risk hurting their chances, it is doubtful that any significant legislation, other than a bill to fund the government, will be passed this year.
One of the biggest unknowns for risk professionals is what effect the elections will have on issues of specific interest to them in 2017. Three areas in particular—flood insurance, cybersecurity and health care—are expected to be on the agenda, but the outcome of these discussions will largely depend on which candidates the American people choose when they go to the polls.
Arguably the top issue of concern for many risk managers is the National Flood Insurance Program (NFIP). Regardless of the upcoming elections, the NFIP will be a major issue in Congress as the program is up for renewal in September 2017.
House members addressed flood insurance earlier this year by passing the bipartisan Flood Insurance Market Parity and Modernization Act (H.R. 2901) by a vote of 419-0. This bill, which has yet to pass the Senate, encourages the development of a private flood insurance market for homeowners. If H.R. 2901 or its Senate companion bill (S. 1679) are not passed in these last months of the current Congressional session, they will likely be added to the discussions during the reauthorization process next year.
There are conflicting views on how the program should be structured moving forward. Because the NFIP has accumulated significant debt in recent years—$23 billion as of 2015—some members of Congress have suggested eliminating the program entirely in favor of private insurance. On the other hand, many in the risk management community, including RIMS, support a long-term reauthorization of the NFIP to maintain a sense of stability within the marketplace. RIMS also believes certain changes will be necessary in order for the NFIP to remain viable, including continuing to move toward risk-based premiums, updating FEMA maps, increasing the number of program participants, and encouraging competition among private insurers to provide consumers with enhanced policy options.
Cybersecurity and cyber insurance also continue to be major concerns for risk professionals. The 2015 RIMS Cyber Survey found that more than half of the respondents carried standalone cyber policies and, among those who did not, almost all planned to obtain one in order to stay ahead of possible threats.
In 2015, President Obama made cybersecurity a top priority for his administration. Earlier this year, in an effort to ensure that his long-term strategy continues, he created a Cybersecurity National Action Plan (CNAP). This plan seeks “to enhance cybersecurity awareness and protections, protect privacy, maintain public safety as well as economic and national security, and empower Americans to take better control of their digital security.” Bipartisan cybersecurity legislation was passed in Congress and a number of bills addressing various cyber issues are awaiting a floor vote. Additionally, many members who are champions for cybersecurity are expected to remain in Congress next year.
Cyber breaches and data theft have made headlines repeatedly during this election cycle, especially due to numerous email hacks and the more recently realized vulnerabilities with electronic voting systems (see page 22). Yet, despite tech-related controversies involving Hillary Clinton’s use of an unsecured email server and Donald Trump’s comments about cyber terrorism, neither candidate has released detailed position statements on the approach they will take to cybersecurity once in office.
However, the efforts in Congress and the current administration’s actions to address cyberthreats offer reason to hope that addressing cybersecurity issues will continue well after elections are over and regardless of which party wins.
Health care, specifically the Affordable Care Act (ACA), has been at the forefront of discussions not only in the presidential campaign, but in many of the House and Senate races as well.
The two primary presidential candidates are at odds on the law. If elected, Donald Trump has pledged to repeal the ACA, while Hillary Clinton plans to uphold it. Current House and Senate Republicans have long been trying to get rid of the ACA—indeed, they have attempted to repeal the law more than 60 times since gaining control of both houses. Therefore, if Trump wins the election, it is likely that a strong push toward repeal will begin shortly after he is sworn in. A President Clinton, would also face strong opposition to the ACA and its expansion, even if Democrats regain control of the Senate, since the House will likely remain Republican-controlled.
In addition to the politics surrounding the law, many insurance companies have been reconsidering their involvement in the ACA exchanges. UnitedHealth Group announced in August that it will stop selling insurance on the exchanges in most states beginning in 2017.
In addition to the collapse of almost all of the ACA insurance co-ops (of the original 23 co-ops only seven remain), this announcement has led many to believe that there will be a spike in premiums in 2017. How much of a spike is unknown, but Marilyn Tavenner, president and CEO of America’s Health Insurance Plans and the former administrator of the Centers for Medicare and Medicaid Services during the implementation of the ACA, has predicted major increases. She cited market shifts and rising health care costs as the reason, and predicts that they could start as early as Nov. 1, when open enrollment for 2017 is set to begin. If there are major increases in consumer costs, this could be the catalyst that forces both parties to rethink how the ACA is implemented and seek alternatives to restructuring the exchanges.