Recent events, the terrorist attack of 9/11, the failure of Reliance Insurance, the bankruptcy of Enron and the severe under-pricing that took place through the 1990's, "support the view that the industry had been very fortunate in avoiding financial catastrophe," the association said.

This new reality underscores the need for regulators to re-focus their attention on addressing the financial stability of the industry, CIAB said.

"Among our members at home and abroad, we sense growing unease about the financial stability of the domestic and international marketplace," said John Van Osdall, CIAB's 2002 chairman in a statement.

Mr. Van Osdall said, "Sept. 11 demonstrated all too well that the horrific destruction of buildings in New York City can have serious repercussions for insurance markets throughout the globe,"

"The recent failure of Reliance and other insurers should be a wake-up call for the industry," Ken Crerar, CIAB's president, added. "We are surprised how little attention billion-dollar insolvencies get from regulators and the media."

"A solvent insurance market protects consumers and guarantees that insurers are around to honor the commitments made to policyholders in the insurance contract," Mr. Crerar said. "That must be a primary purpose of regulation."

CIAB said "it believes regulatory efforts should be directed at preventing insolvencies by ensuring adequate financial safeguards are in place.

"While preventing insolvency altogether is not realistic in a competitive market, regulators and the industry must refocus attention on weaknesses in the regulatory system for monitoring solvency in an expanding global context," said the statement.

CIAB also said regulators should monitor insurers' compliance with the safeguards they institute "in a centralized and cooperative manner to ensure the most efficient and thorough review of compliance."

Regulators must act quickly to minimize harm to policyholders and the public, the group said.

In an NU Online report on March 25, Weiss Rating Inc., based in Palm Beach Gardens, Fla., reported that for the first nine months of 2001 companies experienced a $738 million net loss, compared with a $19 billion profit for the same period in 2000.

Much of the loss, Weiss said, was blamed on the terror attack of 9/11 and a slumping stock market.

Martin D. Weiss, chairman of Weiss Rating, said that policyholders could expect to see insolvency from some companies with 50 percent or more of their business in workers' compensation because the line will be hit heavily by claims over the long-term.