The study, requested by CIAB's Foundation for Agency Management Excellence, its nonprofit education foundation, titled "Managing Insurer Insolvency," was prepared by Stewart Economics Inc.

The report concluded that beginning in the 1940's, increased competition and legal challenges caused the protectionist insurance system to unravel.

"Price competition squeezed profit margins," the report said. "Mistakes were less frequently forgiven. Companies with high costs and no particular advantages were gradually squeezed out. That process continues today and will continue for decades into the future."

As for regulators, they saw their role as preventing insolvencies then, and they continue to see it that way now.

The report, however, observed, "They would have done better to see their duty not as saving failed companies but as saving the public from failed companies."

The report advocates allowing market forces to dictate the health of insurance companies, and allowing those forces to work quickly, without delay. Those hurt by regulators allowing an insolvent company to be kept alive are the policyholders footing the bill.

"The regulatory mission is not to save companies; it is to minimize public harm," the report said. "That may involve rescuing a company here and there, but in the usual case it involves the opposite?taking the dying company out of the market before it can do more damage."

The hard market has "reduced the incidence" of company insolvency, and "government and business people who want better insurance regulation ought to use this respite" to improve the regulatory situation, according to the study.

Ken A. Crerar, president of CIAB, said the study is important because insurance brokers rely on the findings of regulators and rating agencies for information about insurer solvency.

"Improved solvency regulation and ratings are critical to brokers because they do not have access to the sort of detailed financial information about insurance companies that state regulators and rating agencies have," Mr. Crerar said in a statement.

He continued that the solvency study shows the benefit of having an education foundation that can conduct important research.

"It is vital for state regulators and lawmakers to have access to a study like this to assist them in charting a course of action as we head into what may be some difficult times ahead," Mr. Crerar noted.