While the US presidential election results continue to be tallied, industry experts are saying insurance companies can now rest easy knowing that Congress will not be dominated by progressives.
Insurers had feared that a Democratic sweep would allow progressives to reimplement regulations introduced after the 2008-2009 financial crisis, as well as push for a disruptive revamp of the country’s Affordable Care Act, Reuters reported. But current figures suggest that while the Democrats will take the majority of the House of Representatives, the Senate will remain under the control of the Republicans.
News of an expected Republican-dominated Senate has already made waves in the insurance space.
On Wednesday, health insurance stocks jumped, and the S&P 500 managed care index increased by 9.8% as investors and insurance trade groups celebrated Republicans holding the Senate.
“The Senate traditionally has been a brake in our country on populist impulses, and populist impulses really can create a lot of volatility,” American Property Casualty Insurance Association senior vice president of federal government relations & political management Nat Wienecke told Reuters.
According to S&P Global Ratings associate director of insurance ratings James Sung, the split in Congress will make it “very difficult to do substantial healthcare reform.”
“We’re reading it as less risk for the industry,” the associate director added.
But the insurance industry is still not out of the woods yet; there remains potential risk from social unrest should the US presidential election results be contested, and it can cost insurers billions.
“If you see another round of civil unrest as we saw in the third quarter and second quarter, we’re talking probably something that ends up in the billions of dollars of direct insured losses,” said Piper Sandler insurance analyst Paul Newsome.