Flood program puts State Farm lobbying in focus

State Farm's headquarters on Veterans Parkway in Bloomington. (WJBC file photo)

BLOOMINGTON – By definition, the omnibus spending bill passed by Congress last week had a lot stuffed into it. One thing that wasn’t: a change to the National Flood Insurance Program that State Farm Insurance Cos. lobbied against.

The provision would’ve let State Farm’s competitors take over many of the 800,000 flood insurance policies the insurer recently transferred to the government when it withdrew from NFIP. The Bloomington-based insurer fears those competitors would use that access to poach away more traditional lines of auto and home insurance business from its agents.

State Farm spent $4.6 million on lobbying Congress and federal agencies in 2010, and another $2.7 million in the first nine months of 2011, according to legally required disclosures filed with Congress. The debt-riddled NFIP – propped up repeatedly with short-term extensions – and efforts to change it were among the top issues State Farm lobbied on in 2011, according to the disclosures. (Fourth-quarter disclosures are not yet available.)

Last week, when Congress passed the omnibus spending plan, the NFIP was extended another six months – and the provision that State Farm opposed was not included. The issue could resurface next year, but State Farm is proud of its recent efforts to “educate Congress about this issue, and how it was somehow short-sighted,” spokesman Phil Supple said Tuesday.

“We think we had some impact, but there were other political issues that came into play that took this legislation elsewhere,” Supple said.

The provision was supported by the Property Casualty Insurers Association of America. One of State Farm’s key arguments against it came from the Federal Emergency Management Agency itself, which said in a letter in June that taking on State Farm’s 800,000 policies will ultimately save NFIP about $50 million a year.

That’s because FEMA was able to get a deeper discount from a vendor it uses to oversee NFIP policies because it took on so many State Farm policies.

“The (provision) was a special-interest earmark, sold under the false premise that it would somehow relieve the federal government of some obligation for flood liability,” Supple said. “That’s not the case.”

Illinois Sens. Dick Durbin, a Democrat, and Mark Kirk, a Republican, were helpful in State Farm’s efforts, Supple said.

Kirk “is in favor of allowing FEMA to continue managing the old State Farm plans they picked up as opposed to letting them be turned over to private insurance companies,” spokesman Greg Lemon said in an email.

State Farm is hardly alone in devoting big dollars to lobbying. Peoria-based Caterpillar spent about $480,000 to lobby the federal government in the third quarter of 2011 alone. Moline-based spent about $374,000.

During that quarter, State Farm spent about $720,000, disclosures show. About 73 percent of that amount was spent on in-house lobbying, the rest spread across a handful of Washington, D.C.-area lobbying firms specializing in different issues, records show.

State Farm’s other major legislative interests, according to the disclosures: an optional federal charter for insurance companies; anti-distracted driving initiatives; the Dodd-Frank financial regulatory overhaul; and online privacy and consumer-data protection, among many other topics.

Supple said State Farm does not contribute to political parties or candidates and does not operate a political action committee.

“But we do rely on our ability to have conversations with lawmakers and express our point of view, and it’s always based on what’s best for our customers, being a mutual company,” Supple said. “So yes, we have a lobbying expense out there.”

The Associated Press contributed to this report.

Ryan Denham can be reached at ryan@wjbc.com.