The highly anticipated and most expensive general election in US history has been settled. After $14B of spending and years of campaigning, the unofficial results show Republicans had a strong election day.
The national messaging on inflation, economic uncertainty, immigration, and low approval ratings of the incumbent president had an impact on both the national and state election results.
There was much at stake in this election for independent agents and the insurance industry. This election, control of the Ohio Supreme Court, the State Legislature, the Ohio Congressional delegation, and how legislative districts are drawn were all in play. OIAPAC, OIA’s non-partisan political action committee, tracks and engages in political races and issues on behalf of the Ohio independent agent community.
In this article, we will break down how independent agents fared in the election results.
Supreme Court
The Ohio Supreme Court elections are arguably the most important state elections to your policyholders, profession, and businesses. After a string of defeats of Justices with a judicial restraint philosophy in 2018 and 2020, the majority of the Ohio Supreme Court was at stake in this election. Currently, the Court has a 4-3 majority of Justices with a philosophy of judicial restraint, strict constructionism, and deference to the legislature on policy issues.
Every two years, OIAPAC goes through the exercise of vetting candidates for the Ohio Supreme Court by studying their legal opinions, interviewing the candidates, and meeting with other insurance and business groups for insights on their views.
This year, OIAPAC endorsed a slate of candidates – Justice Joe Deters, Judges Megan Shanahan, and Dan Hawkins – that all won by an 11%-point margin. These victories ensure the Court will maintain a majority philosophy of judicial restraint for the next four years.
This is a remarkable shift for Republican Supreme Court Justices as it was just 4 years ago when incumbent Justice Judith French, now Director of the Department of Insurance, was defeated by 10% points despite Trump winning Ohio by 8%. In 2021, the Legislature passed a law requiring party labels to be listed next to the candidate’s name for the Supreme Court and Court of Appeals. This change has allowed GOP-backed court candidates to run in nearly identical margins to the top of the ticket in 2022 and 2024. With Ohio trending deep red over the past 3 presidential elections, it may make these races increasingly more difficult for Democrats to win.
Why does the Supreme Court matter? Never forget the 1999 Scott-Pontzer ruling that extended coverage from an employer’s business auto and commercial umbrella policies to an employee who was killed while driving his wife’s private automobile outside the scope of his employment.
Fortunately, the Ohio civil justice system has changed a lot over the past 20 years. The Scott-Pontzer decision was overturned in 2003 along with a plethora of other activist rulings that plagued our judicial system, state economy, and insurance marketplace. In addition, to the Court rulings, the Legislature enacted tort reforms that included caps on non-economic damages, statute of repose and limitations, and joint and several liability changes.
Outlook for Ohio Independent Agents: Ohio will continue to have a predictable and stable legal environment. Tort reform laws on the books should be safe from being overturned by the Supreme Court. The Court will defer policy decisions to the legislature thereby avoiding a replay of activist rulings like Scott Pontzer.
State Legislature
Despite small losses on election night, Republicans maintained their legislative supermajorities in the House (65-34) and Senate (25-8). Before the election, Republicans held supermajorities in both the Ohio House and Senate, where they held 67 of 99 and 26 of 33 seats so they knew it would be difficult to defend all of their seats.
With returning supermajorities, the GOP will maintain control of the legislative agenda. We anticipate it will focus heavily on a pro-business agenda.
In some inside baseball, control of the Speaker’s gavel has some intrigue for Ohio IAs and OIA as it is currently held by OIA member Jason Stephens. Senate President Matt Huffman is running unopposed for a seat in the House and is challenging incumbent Speaker Jason Stephens. Typically, the majority caucus will meet in the weeks following the election to select their nominee for Speaker. The full House of Representatives will vote to elect a Speaker during the chamber’s opening session in January.
Speaker Stephens did not win the Republican caucus vote in November 2022 but was elected Speaker on the floor with the support of a minority of Republican members and all the chamber’s Democrats. Of note, only 12 of the 22 Republicans who backed Speaker Stephens on the House floor in January 2023 will be returning to the General Assembly next year narrowing his path to the Speaker’s gavel.
There will be two independent agents and OIA members serving in the legislature with Jason Stephens and Rep. Brian Lampton. Rep. Lampton is expected to return as Chair of the House Insurance Committee.
Outlook for Ohio Independent Agents: IAs will continue to have a favorable business environment in the legislative agenda. We anticipate a continued push towards lower state taxes for individuals and small businesses, elimination of the CAT tax, no new taxes on insurance premiums or commissions, and a reduction in regulations.
With insurance being a state-regulated business, it means there may be some additional opportunities to advance some potential issues like reducing regulations on agent licensing and opening up a private option for workers’ compensation (this would likely require a constitutional amendment). This GOP makeup will make passing laws regulating storm scammers, online insurance verification, and extending the nonrenewal notification period to 90 days more challenging.
State Issue 1 – Constitutional Amendment on the Redistricting Commission
Ohioans rejected a constitutional amendment that would have changed the way in which state and federal legislative districts are drawn. Voters declined the amendment by a 55% – 45% margin.
The current process of an appointed panel of elected officials consisting of the Governor, Auditor, Secretary of State, Speaker of the House, Senate President, Minority Leaders of the House, and the Senate will continue to draw the legislative districts. This has traditionally favored the party in power which has been the Republicans in Ohio for the past 30 years.
Outlook for Ohio Independent Agents: Continued control of the redistricting process by majority Republicans. OIAPAC did not weigh in on this issue.
Federal Races in Ohio – US Senate and House
Ohio’s Senate race was center stage for control of the US Senate. With $536M spent, Ohio voters experienced the full onslaught of spending with non-stop Brown-Moreno commercials on our TVs, radio, social media channels, and text messages. The race has set the bar for the most expensive Senate campaign ever.
3-term incumbent Senator Sherrod Brown (D) was defeated by private businessman Bernie Moreno (R) by a 4% margin. Moreno won the GOP primary with Trump’s backing and was able to ride Trump’s 12% point victory in Ohio. This was a key race in determining majority control of the US Senate, which Republicans will now have. At this time there are still 5 uncalled races, meaning the current 52-seat GOP majority could grow to 57. It would not create a filibuster-proof majority but it would make a Trump/GOP agenda much more plausible in the Senate.
With the exception of Senator Brown’s defeat, Ohio’s Congressional delegation will remain the same in the next Congressional session. Of Ohio’s 15 members of Congress, 12 Republicans and 3 Democrats will return to represent the Buckeye State.
Republicans took a shot at flipping the 3 Democratic districts but came up short in doing so.
Outlook for Independent Agents: The 20% tax cuts passed in 2017 that are set to expire in 2025 will likely be renewed. In addition, it is highly unlikely that capital gains tax rates will be changed under this administration and Congress.
Knowing this, we will not likely see the same agent and broker M&A run-up that we experienced in Q4 2020 and 2021 when Biden won the presidency and Democrats controlled the House and Senate. For agents considering when to sell, the election outcome is no longer a factor. They can control the timing of their decision without fear of the federal government changing tax rates and having an impact on their value or take home from the sale.
The future funding of the flood and crop insurance programs will be under greater scrutiny as budget hawks will put pressure on GOP leaders to reduce spending. With the growing national debt it will be difficult to fund every federal initiative and deliver tax cuts. This will create a challenge in messaging for independent agents as we advocate for the preservation of tax cuts while asking for greater funding for the flood and crop insurance program.
Conclusion
I think we can all agree that it will feel good to put this election and the nonstop text messages behind us and get back to our daily lives. As it relates to our business, independent agents fared well in the election. In sum, our business will not likely change much as a result of the election.
About the Author:
Jeffrey S. Smith, JD, CIC, CAE serves as Chief Executive Officer for Ohio Insurance Agents Association (OIA) and IA Valuations. He is responsible for leading the organization’s strategic initiatives and day-to-day operations.
As CEO of IA Valuations, Smith has consulted and reviewed over 200 agency valuations for independent agents across the US. IA Valuations serves independent agencies as a trusted advisor and strategic business partners as they implement strategies to increase their agency value, grow their businesses, and transition their agencies. Smith provides insights into the agency’s operations, risk factors, and legal guidance on how to perpetuate and maximize value in a sale.
