Property-casualty insurer and producer groups are putting apositive spin on the Democrats' dramatic takeover of the U.S.Congress. In our NU cover story this week, a host of political bigsin the industry express confidence they'll be able to work with theDems who will rule Capitol Hill come January, and speculate thatsome issues on their agenda might even get a more sympathetichearing.

The best bet for the industry under the Democrats is in convincingCongress to once again extend the Terrorism Risk Insurance Act–andperhaps even replace it with a more permanent facility. After all,it was Senator Hillary Clinton who said keeping a federal terrorismreinsurance failsafe in place to support the economy was a matterof national security, while it's been Republicans–especially thosein the White House–who have been looking to kill the program andleave terrorism risks to the not-so-tender mercies of the freemarket.

Then there is federal regulation–whether via an optional federalcharter or a federal standards approach, as envisioned in theso-called SMART legislation. I was always skeptical whether aRepublican-led Congress–so averse to Big Government in Washington,and so supportive of states' rights–would ever take power away fromthe states on insurance oversight and hand it to yet anotherbloated bureaucracy run by Uncle Sam.

With Democrats ruling the roost, perhaps a federal regulatorybill might gain some traction. Did the Democrats ever see anindustry they didn't want the feds to regulate??? The question iswhat kind of regulation would satisfy them–the casual,pick-your-poison approach of optional federal charter advocates,the even more casual federal benchmark strategy laid out bySMART…or would they go hog wild and establish a far-reaching,mandatory oversight system that the industry would come toregret?

Then there is the issue of whether we need to establish anational catastrophe fund to stabilize hurricane- andearthquake-prone states–and their insurers. Again, Republicans areusually skeptical about Big Government projects, and fearful ofsaddling Uncle Sam with open-ended liabilities.

But the Democrats created the National Flood Insurance Program,after all, so why not take the next logical step and upgrade ourcat coverage system with a broader, more comprehensive fund–perhapseven in conjunction with a permanent terrorism reinsurancebackstop? Insurers might be asked to dump their precious floodexclusion to earn passage, but if allowed to charge the premiumsnecessary to support such a coverage expansion, it might be worthit.

Of course, Democrats could start poking their nose into the useof credit scores in pricing insurance, or even explore allegationsof insurer redlining in open hearings. They might even challengethe industry's sacred antitrust exemption under theMcCarran-Ferguson Act, or at least look to scale it back. But thatgoes with the territory when you are dealing with Democrats.

The point is that insurers could work with this crowd if theyremain reasonable and flexible.

Some of you filed some interesting comments on my Election Dayblog entry. If you have any other observations, predictions, hopesor fears to share, feel free to click below and post yourcomments!