Fielding a question about why rating agencies usually seem to know about insurer financial difficulties before regulators do, J. Robert Wooley, insurance commissioner of Louisiana said, "The rating agencies have more resources."

"Also, when a regulator finds out that a company is in trouble, that has to be kept confidential or insolvency will become a self-fulfilling prophecy."

Mr. Wooley added that if the financial difficulty of the insurer was made public and the prophecy was self-fulfilled, the companies would complain that they "could have made it" had the insurance department not intervened.

"The public, on the other hand, would say we waited too long. Either way, the commissioner gets second-guessed," he said.

Robert P. Hartwig, senior vice president and chief economist of the Insurance Information Institute in New York, countered that "propping up weak insurance companies can do more harm than good."

Troubled carriers, in his view, should be "quietly euthanized." That way, he said, there aren't years of unpaid claims.

"We have to get rid of the ?you're too big to fail' doctrine," Mr. Hartwig said.

According to Robert H. Moone, chairman, chief executive and president of Columbus, Ohio-based State Auto Insurance Companies, regulators should go beyond standard assessments of insurer solvency. "You have to look at corporate governance," he said. "Some insolvencies come from lack of board oversight and bad management."

Thomas B. Ahart, president of broker Ahart, Frinzi & Smith in Stewartsville, N.J., brought up the point that agents are signing up with more insurer solvency rating organizations, hoping to better track the financial health of companies in their office. "Some of the strongest companies are now gone"--and agents and brokers are nervous about that, he said.