The insurance industry remains hopeful that the unexpected election of Sen. Trent Lott, R-Miss., as Senate Republican whip will not result in punitive legislation against the industry.

Lott was elected whip, the second-highest Republican minority leadership position, 25-24, over Sen. Lamar Alexander, R-Tenn., on Nov. 15.

Lott is suing State Farm over the insurer’s decision to declare part of the damage from his house on the Mississippi Gulf Coast as partly flood-related and therefore not covered by his insurance.

And, he has vowed to introduce legislation in the next Congress that will repeal the anti-trust exemption component of the McCarran-Ferguson Act, the linchpin of the current state-based regulation of the industry.

Because of his seniority, Lott was also able to inject into the Homeland Security Department appropriations bill several million dollars to pay for a study of alleged anti-competitive industry practices uncovered by the handling of claims resulting from Hurricane Katrina.

But the American Council of Life Insurers hopes any legislation dealing with McCarran-Ferguson is undertaken in the context of the Optional Federal Charter.

“A discussion of McCarran-Ferguson belongs as part of any overall optional federal charter debate,” an ACLI staff official said. “If Congress is going to consider McCarran-Ferguson, it should do so as part of the broader discussion of an optional federal charter and insurance modernization and not as an isolated matter.”

John Jonas, an industry lobbyist and senior partner at Patton Boggs, also said that, in the end, Lott will have to moderate his anger at the industry.

“In the end, Republicans, like Democrats, must show some civility, some legislative accomplishments,” Jonas said. “Going into a death crouch isn’t going to work.”