Insurers' donations an issue in CFO race

Republicans differ on role of money

Article Courtesy of The Sun Sentinel

Published  September 4, 2006


Tom Lee has taken hundreds of thousands of dollars from big insurance companies whose rate requests come before state regulators. Randy Johnson has received thousands of dollars from insurance agencies even though he has pledged to avoid contributions tied to Florida's current crisis in homeowner's coverage.

The two leading Republican candidates for state chief financial officer have some explaining to do about the campaign money they have received from one of the biggest industries overseen by the CFO, a member of the Florida Cabinet.

According to campaign-finance records filed with the state, Lee, the Republican frontrunner and Florida Senate president, has received nearly $300,000 in contributions tied to the large property-insurance companies regulated by agencies within the CFO's Department of Financial Services. They accounted for about 10 percent of the $2.8 million his campaign had received as of Aug. 11.

His challenger in next week's Republican primary, state Rep. Randy Johnson, of Celebration, accuses Lee of being in the industry's "pocket" and says he refuses to take such donations. But Johnson, too, has gotten money from insurance interests -- though a small fraction of Lee's money, or $17,000. Overall, Johnson has received more than $1.4 million in contributions.

A third GOP candidate, Milt Bauguess, is a Tallahassee financial planner and political newcomer whose cash-poor campaign has languished.

Alex Sink, a retired banker and the sole Democratic candidate, has received only $22,500 from insurance interests, or about 1 percent of her $2.17 million in campaign funds. She describes the contributions as minimal and vows to be an effective and impartial CFO if elected in November.

Campaign finance has emerged as a central issue in the Republican primary race, with Johnson attacking Lee's insurance industry support and Lee calling Johnson's campaign finance pledge a sham. The CFO oversees a dozen agencies that regulate everything from insurance and banking to securities and mortgage brokerages.

Johnson argues the CFO must avoid undue influence from insurers as Florida tries to solve its latest property insurance crisis, spawned by the rash of hurricanes in 2004 and 2005.

Lee counters that the campaign money he has accepted from insurers would never "buy" them favorable treatment from his office.

"I have proven time and time again over a decade of being in the Senate that I can stand independent of my contributors on issues that are important to the consumers of this state," he said during an interview last week.

Still, the two have clashed over Lee's support of a 2005 insurance bill that, among other things, allows property insurers to raise rates by as much as 10 percent without seeking regulators' approval.

Johnson claims the insurers have now rewarded Lee for his support.

"Tom Lee has accepted more campaign donations from Big Insurance than any other single industry," Johnson said last week. "And he has bowed to threats of the insurance lobby, giving them what they wanted."

Lee calls such criticism misleading and hypocritical. He describes the 2005 insurance law as a positive step for cutting the state's exposure to catastrophic storm claims; for shoring up Citizens Property Insurance Corp., the troubled, state-backed insurer of last resort; and for helping Floridians fortify their homes against hurricanes.

He also cites Johnson's acceptance of insurance-related campaign contributions, both directly from agencies that sell homeowner's coverage and in the form of "soft money" from political groups, such as the state Republican Party, that are strongly supported by insurance interests.

"Let's just say, in a variety of ways, his campaign is taking great liberties with the truth," Lee said. "Particularly, with his so-called commitment not to take insurance money."

Johnson has accepted contributions from many business interests that sometimes have business with one or more of the CFO's agencies, among them developers, builders and payday lenders. But he says insurance is in a category all its own because the latest coverage crisis poses a historic threat to Florida homeowners.

Styling himself as a reform candidate, Johnson has proposed a series of measures to deregulate Florida's insurance market, open the state to greater competition, and counter the sharp rate hikes that he says overburden homeowners.

"I don't want contributions to cloud the minds of regulators when they're addressing this crisis," he said. "I propose to change the way they do business in Florida, and the insurers don't like that. They are investing millions of dollars in donations to try to keep things the way they are, because they have billions of dollars at stake, and the insurance industry has been Tom Lee's biggest benefactor."

The way Lee sees it, campaign contributions are fundamental democratic freedoms, and he accepts them as long as certain industry contributions remain a small part of his overall total.

He also disagrees with the idea that receiving money from insurance interests compromises his ability to oversee the industry. He cited his record as a leader in the Senate.

"In the past, I've taken contributions from energy and telecom industries, and I fought those industries all the way when they were at odds with Florida consumers," Lee said, noting his opposition to energy deregulation and phone rate hikes. "I think people know, from their record, the independence of elected officials and their ability to separate the campaign money they get from the policies and decisions they make."

Both candidates have received substantial "soft" money from the state Republican Party -- Lee has gotten $431,715, while Johnson's take totals $319,530. The insurance industry is the Florida GOP's fourth-largest contributor, having donated almost $1.4 million to the party during the first half of 2006 alone.

Democrats received less than $215,000 from the industry during that same period, ranking insurance 10th among its biggest contributors.

Johnson argues that his insurance contributions are far different from Lee's. His insurance supporters are the independent agencies that sell policies for many carriers and are not beholden to any one major insurer. Lee, on the other hand, solicits and receives major endorsements from large property insurers with billions of dollars at stake in Florida, he says.

"The bottom line with any office that regulates business is that companies are going to give a lot of money to make their point," said Aubrey Jewett, a political science professor at the University of Central Florida who has consulted for both parties. "They want access, and they hope to elect the people who will give them that."