LAST WEEK'S CONGRESSIONAL elections have created an entirely new environment for risk management and employee benefit issues. For at least the next two years, both houses of Congress will be under Democratic control while the executive branch remains in Republican hands.

While conventional wisdom may adhere to the principle of "united we stand, divided we fall," divided government isn't necessarily a bad situation for all issues, provided, of course, that a spirit of bipartisanship prevails.

Possibly nowhere is this truer than in the case of extending the federal terrorism insurance backstop beyond its scheduled Dec. 31, 2007, sunset. The backstop enjoys broad support on both sides of the aisle. Unfortunately, one of the relatively few lawmakers who did not share in that sentiment happened to be one who had the most power to block extension of the backstop: Senate Banking, Housing and Urban Affairs Chairman Richard Shelby, R-Ala. Last week's election should elevate Sen. Christopher Dodd, D-Conn., to the chairmanship. Sen. Dodd, a co-sponsor of the original Terrorism Risk Insurance Act, is far more likely to move quickly-and positively-on the matter.

The change of party control in the House means that Rep. Barney Frank, D-Mass., will assume the chairmanship of the House Financial Services Committee. Rep. Frank, like his predecessor, Rep. Mike Oxley, R-Ohio, is a supporter of the backstop and can be expected to shepherd through bipartisan legislation.

That said, the bipartisan spirit must extend to the other end of Pennsylvania Avenue for the backstop extension to become reality. The administration, a once-avid supporter of the backstop, has slid into opposition based on what we regard as a misreading of the economic realities of insuring against terrorism by seeing a perfect free market where none exists. We hope President Bush will heed the call for a backstop when it comes, and signs an extension into law.

While we realistically cannot hope for much in the way of meaningful tort reform in the next Congress, we nevertheless believe that some limited reform may still be possible. But anything that will pass muster must have a strong bipartisan base of support.

Cooperation needed on benefit issues

The same is true in the benefits arena. There is no question that issues such as expansion of health savings accounts and exempting association health care plans from state regulation-which largely were supported by Republicans and opposed by Democrats-are dead, at least for the next two years.

But we believe there are plenty of employee benefit issues for which both parties can and should work together. While many Democrats, for example, may not be enamored with HSAs, the arrangements are here to stay and will, we think, represent a growing part of the health care market place.

It would behoove Democrats to work with Republicans to make HSAs work better and fix glitches in the law that prevent employers and employees from making the maximum contributions allowed to HSAs.

Similarly, the stability of employer-sponsored retirement plans should be an issue on which bipartisan cooperation is possible. The most significant development in the pension area has been the move of employers away from defined benefit plans in favor of a defined contribution plan only approach. Certainly, the new Congress should be looking at whether there are steps that can be taken that would encourage employers to retain defined benefit programs.

Above all, legislators should know that employers expect them to work together and find a common ground on risk management, employee benefit and many other issues. If Congress fails to do that, we expect that those members who were more interested in bashing opponents than in cooperating with them will be looking for new jobs after the next elections.