[EL] ELB News and Commentary 1/22/16

[Edward Still]

My father was the president of a fire & casualty insurance company. I agree
with Sean's basic premise with one addendum. The way an insurance company
makes money is by investing most of the premiums (some has to be held to
pay claims in the short term). If all the claims are likely to be in the
short term, there is no way to get a good return (unless they invest in
those penny stocks I used to receive tips about before I started using
Gmail).

Ed

Edward Still
Edward Still Law Firm LLC
429 Green Springs Hwy, STE 161-304
Birmingham AL 35209
205-320-2882
still at votelaw.com
www.votelaw.com/blog
www.edwardstill.com
www.linkedin.com/in/edwardstill <http://www.linkedin.com/edwardstill>



On Fri, Jan 22, 2016 at 7:49 AM, <sean at impactpolicymanagement.com> wrote:

> The insurance idea is certainly innovative, but it's clear the author
> doesn't really have much of an idea of how insurance works. For those who
> didn't click through, the proposal is to have a private-sector insurer sell
> insurance to either candidates or supporters of a candidate that promises
> to fund independent expenditures of an amount three-times greater than any
> independent expenditure that might be run against the insured candidate.
>
> But insurance generally doesn't work when the number of customers is
> relatively low and the probability of an event is fairly high (I'm going to
> suggest that for competitive races at the federal level the probability of
> independent expenditures is north of fifty percent, but that truly is a
> guess - anybody have any research on this?). Premiums are basically set at
> probability x loss insured against, and of course in this case the loss is
> theoretically unlimited (the policy could set limits, of course). The FEC
> reports, for example, that there were about $31 million in IEs in New
> Hampshire in 2014 for the Senate and House races. Without looking too
> deeply I'd guess that between primary and general elections we're probably
> talking less than 10 candidates total, and it's fair to assume the bulk of
> these IEs were in the U.S. Senate race. A 50% probability, a 3X payout, and
> add in some sort of uncertainty premium for the unlimited nature of the
> potential loss, and you're probably looking at a premium in the
> neighborhood of $60 million. It's hard to imagine too many for-profit
> insurance companies jumping at the chance to enter this market, it's
> obviously impossible for the candidate to afford, and it would be cheaper
> and far less expensive for supporters to simply issue a press release
> saying "If my candidate is attacked by an IE I'll spend an equal amount (or
> greater) through my own super PAC." Not to mention more effective, since
> this proposal seems to call for the insurance company to directly arrange
> for the IE, which for those of you who have spent much time around
> insurance execs and actuaries seems like a hilarious opportunity for
> entries in the "worst political ad of all time" contest. At the very least
> it seems likely that an insurance company might not have the same degree of
> political nimbleness and awareness as say, an actual super PAC that a donor
> might establish or give to.
>
> Best,
>
> Sean Parnell
> President
> Impact Policy Management
> Alexandria, Virginia
> 571-289-1374
> sean at impactpolicymanagement.com
>
> “How to End Super PACs, Once and for All: This proposal for Super PAC
> ‘insurance’ could work by deterring third-party spending.”
> <http://electionlawblog.org/?p=79193>
> Posted on January 21, 2016 8:19 pm <http://electionlawblog.org/?p=79193>
> by Rick Hasen <http://electionlawblog.org/?author=3>
> Read this Nick Warshaw blog post
> <http://www.washingtonmonthly.com/republic3-0/2016/01/how_to_end_super_pacs_once_and059351.php>,
> and if you want more info, check out the law review article
> <http://www.uclalawreview.org/forget-congress-reforming-campaign-finance-mutually-assured-destruction/>
> .
> [image: Share]
> <https://www.addtoany.com/share#url=http%3A%2F%2Felectionlawblog.org%2F%3Fp%3D79193&title=%26%238220%3BHow%20to%20End%20Super%20PACs%2C%20Once%20and%20for%20All%3A%20This%20proposal%20for%20Super%20PAC%20%26%238216%3Binsurance%26%238217%3B%20could%20work%20by%20deterring%20third-party%20spending.%26%238221%3B&description=>
> Posted in campaign finance <http://electionlawblog.org/?cat=10>, campaigns
> <http://electionlawblog.org/?cat=59>
> ection
>
>
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