Introduction

As the insurance industry seeks approval for mega-mergers and double-digit rate hikes, it is contributing millions of dollars to sway a dozen state races this year that determine who regulates the nation’s insurance companies.

Obscured by the bombastic presidential campaign, the low-profile bid by insurers has far-reaching implications for consumers and businesses alike. At stake are five elections for insurance commissioner — the little-known but powerful state officials who review insurance rates, investigate complaints and scrutinize company finances. But insurance industry cash is also flowing to campaigns for governor. In seven states holding gubernatorial elections on Nov. 8, governors have the power to appoint their state’s insurance regulator.

All told, the insurance industry has pumped more than $6 million into political efforts aimed at those dozen races, according to a Center for Public Integrity analysis of IRS records and data collected by the National Institute on Money in State Politics.

And the insurers aren’t shy about their involvement.

“Legislatures are considering legislation every day that affects our industry and our policyholders,” said Paul Blume, senior vice president of state government relations for the Property Casualty Insurers Association of America. “We need to be engaged not only on the legislative side but on the executive side, in governor races and commissioner races.”

His group has already given at least $200,000 to organizations seeking to elect governors this year.

The industry’s robust political giving is a critical part of a larger influence operation aimed at affecting the sleepy world of insurance regulation. A Center for Public Integrity investigation this month found a pattern of coziness between state insurance commissioners and the insurers they regulate, involving lavish dinners, corporate-backed trips to luxury resorts and the implicit promise of industry jobs once commissioners leave office.

Yet it starts with campaign contributions. Over the past decade, insurance companies and their employees were among the top political donors to commissioner candidates in at least six of the 11 states that elect regulators. And they are consistently among the top contributors to the two major political groups active in gubernatorial races.

Consumer advocates such as Bob Hunter say the campaign contributions give insurers an outsize voice in decisions that impact nearly every American. The former Texas insurance commissioner who runs the insurance program at the Consumer Federation of America said the campaign donations are geared toward winning access and ensuring business-friendly regulators.

“The first thing they want is a commissioner who’s not going to cause them any heartache,” Hunter said.

Where the money goes

This year, the two largest beneficiaries of insurers’ money are the Republican Governors Association and its Democratic counterpart, which seek to elect members of their parties to the top state office. Insurers have given a combined $5.2 million to the organizations so far this year. Those groups in turn spend heavily on TV ads and other activities.

Insurance companies and their employees have donated another $550,000 this election cycle directly to the candidates for governor who can appoint insurance commissioners in Indiana, Missouri, New Hampshire, Oregon, Utah, Vermont and West Virginia.

In the five states where voters will elect insurance regulators next month, the industry has donated at least $272,000 to commissioner hopefuls this cycle.

Most of that went to North Carolina, where insurance interests have contributed about 30 percent of the incumbent’s campaign funds, according to an analysis of National Institute on Money in State Politics data.

In North Dakota, the frontrunner, Jon Godfread, a Republican lobbyist for the Greater North Dakota Chamber, also has industry support: 10 percent of his $74,000 in contributions hail from the political action committees of insurance companies, employees and agents, state records show.

Godfread said insurers make up a small share of his donors. “While I appreciate their support, I have focused on a much broader base,” he said.

Democratic nominee Ruth Buffalo has raised $44,000, mostly from family and Native American tribal sources.

Montana, Delaware and Washington ban contributions from the insurance industry, and the prohibitions have largely stemmed the flow of insurance money in those commissioner races.

Industry involvement is a top campaign issue in North Carolina, where Insurance Commissioner Wayne Goodwin is running for a third term. Insurance company PACs and employees are among the largest sources of contributions for the Democratic incumbent, a fact that his Republican opponent, Mike Causey, says represents a conflict of interest.

“Insurance companies have lots of lawyers working for them. The people do not need another lawyer funded by the insurance industry sitting in the chair of the insurance commissioner,” Causey says in an ad on his campaign website. “We need a consumer advocate.”

In an interview, Goodwin said it was “rather curious, if not ironic” that Causey, a retired insurance agent and lobbyist, would criticize him for industry ties.

The commissioner also said insurance-related donations represented just a portion of his overall campaign haul. He said he vets such contributions, rejecting or refunding checks from firms or individuals with pending business before his office. And he said although Blue Cross Blue Shield of North Carolina’s PAC has given to his campaign, he later fined the company a record $3.6 million this year after thousands of consumers and medical providers complained of billing and enrollment problems.

Goodwin said he opted in to North Carolina’s public financing system in 2008 to avoid just these types of questions. But after the Republican-led Legislature defunded and ultimately repealed the program, he returned to the fundraising circuit.

“I’m a strong proponent of public financing and campaign finance transparency,” he said. “But as long as the rules are what they are, I can’t unilaterally disarm.”

Meanwhile, the industry has mobilized on his behalf.

A group named the North Carolina Opportunity Committee has spent an estimated $3,200 airing television ads to support Goodwin’s candidacy, according to media tracker Kantar Media/CMAG.

The committee’s treasurer is an insurance executive. He did not return calls for comment, and the newly formed group has not yet publicly disclosed its donors.

Former and current commissioners from states that elect regulators say the low-profile nature of the office often means campaigns rely on a shallow donor pool of corporate interests.

“One of the weaknesses of an elected commissioner is you have to get elected,” said George Dale, a former Mississippi insurance commissioner who won the post eight times in three decades. “The only people who care who the commissioner of insurance is are people who have dealings with the insurance department.”

To avoid potential conflicts, four of the 11 states that elect their commissioners ban contributions from the insurance industry.

Even then, there are loopholes. In Georgia, for example, insurers are prohibited from donating to commissioner candidates — but individuals can still write checks. Donations from insurance executives, agents and employees made up roughly 18 percent of all contributions to commissioner candidates in that state during the past decade.

Influencing appointments

States with gubernatorial appointments also often have a vested interest at the table.

In 2005, for example, when the Missouri insurance director’s seat became vacant, then-Gov. Matt Blunt, a Republican, convened a panel of campaign donors and insurance insiders to screen candidates. They recommended a former insurance agent, who had given to Blunt’s campaign.

Blunt did not return a call for comment.

Consumer advocates point to Connecticut, as well.

Last year, Democratic Gov. Dannel Malloy appointed Katharine Wade, a former Cigna Corp. lobbyist whose husband still works there, while the health insurance company was negotiating a merger agreement with Anthem — a deal that the state’s insurance commissioner could play a central role in approving.

The appointment came in a year that Anthem ramped up donations to the Democratic Governors Association, which Malloy had been elected to chair. Additional money from Anthem and Cigna flowed this year — at least $560,000 — as Malloy resisted pressure from consumer groups and lawmakers to remove Wade from the case. (She recused herself last month.)

“Commissioner Wade is a person of integrity, one who is well regarded for her deep experience and knowledge of the industry, and also for her collaborative approach with stakeholders — including insurers and consumers alike,” Malloy spokeswoman Kelly Donnelly told the Center for Public Integrity.

Democratic Governors Association spokesman Jared Leopold dismissed the timing of the insurers’ donations, saying the elevated giving was part of a larger trend among donors. “Supporters of all kinds have increasingly donated to the DGA,” he said, also noting that Anthem and Cigna contributed more this year, $570,000, to the rival Republican group.

Cigna did not return a request for comment. Anthem Inc. declined to comment on the timing of its donations but said it routinely contributes to political groups because state laws and regulations have a direct impact on its business.

“In our attempts to improve the nation’s health care delivery system, it is more important than ever for us to be involved in the dialogue taking place at both the state and federal levels,” said Anthem spokeswoman Jill Becher.

Data reporter Ben Wieder contributed to this story.