The insurance industry led a charmed life in 2006, given the absence of any major hurricane. Peering into my crystal ball, however, I see some clouds on the horizon! Here are my predictions for the top-10 stories of 2007:

1: TRIA Renewed! This one's a no-brainer, especially with more sympathetic Democrats in control of Congress. However, the industry will be disappointed if they expect a permanent terrorism reinsurance backstop to be established–not as long as President George W. Bush is in office. Expect a three-year extension to take it out of the presidential election cycle.

2: Look Out Below On Prices! Flush with cash from soaring profits, and spared a major surplus-draining hurricane, look for an accelerating soft market in most lines. The bottom won't drop out–yet–but underwriting discipline will wane. All bets are off for Jan. 1, 2008 renewals, however, if carriers enjoy another cat-free season.

3: Flood Exclusion Springs A Leak! I expected “lots of smoke but little fire” last year from lawsuits challenging the industry's longstanding flood exclusion. However, with two major cases already going against insurers and facing an uncertain fate on appeal, carriers might still be hit for billions more in damages.

4: Greenberg Is The Comeback Kid! Last year, I predicted former AIG top dog Hank Greenberg would “beat the rap,” overcoming a state civil suit and possible federal charges over alleged misuse of finite re deals to cook his books. Although the publicity drove him from his throne, the authorities have yet to lay a glove on him. He has only just begun flexing his muscles in his reincarnation as head of C.V. Starr.

5: Gov. Spitzer Takes Aim At The Industry! I would not be surprised to see the former crusading attorney general propose a statewide ban on contingency fees. However, I think the industry might be pleasantly surprised by his new insurance watchdog, Eric Dinallo. Look for the former Willis general counsel to be an active player, but more reasonable than many expect.

6: Lloyd's Goes Electronic! I expect the old coffeehouse to go “Starbucks” on us sooner rather than later by testing virtual placements of risks over the Web. If Lloyd's was not interested in exploring such an initiative, why would they have bothered bringing Richard Ward from an energy futures market in as CEO?

7: Collateral Re Rules Change At Last! After years of fighting to at least lower onerous collateral requirements for “alien” reinsurers, foreign carriers will finally get a relatively level playing field on which to play–a long overdue move.

8: Uncle Sam Dips Toe Into Insurance Regulation! Look for surplus lines and perhaps reinsurance to be regulated under standards set by the federal government, but don't expect passage of an optional federal charter as long as there is so much dissension on the issue within the insurance industry.

9: Bermuda Gives Birth To More Billion-Dollar Babies! Emboldened by the absence of disaster losses and the fact that property rates are holding up in cat-prone regions, private equity investors will keep funneling big bucks into Bermuda. However, if we remain storm-free and rates plunge, the money men will move on to more profitable opportunities next year.

10: National Cat Fund Proposal Goes Nowhere! With the industry enjoying massive profits despite two of the worst hurricane seasons on record in 2004 and 2005, Allstate's pitch for a national catastrophe backstop is dead in the water–unless a major storm devastates the New York area!

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