What is happening to insurance regulation? Chester Street Holdings switched all its assets to Iron Trades and then flogged off Iron Trades to raise cash to pay claims. But the result, which the regulator should have seen in advance, was that the long-term claims paying ability of the residual lump would never be able to fork out for its liabilities.

So now Chester Street has gone belly up and the supposed regulator, the Financial Services Authority (FSA), just washes its hands of the matter while thousands of seriously ill claimants will lose out.

On the life side, the papers have been full of the lamentable tales of that once proud institution Equitable Life, which too has left the public worse off while the FSA fiddles in its Docklands home. Last year we saw motor insurer Drake go down the pan while the FSA looked on. Just what does the FSA do?

We hear scare stories that if the proposed general insurance regulator, the General Insurance Standards Council, fails, then the sector faces regulation by the draconian FSA. Is this the same FSA that has allowed so many companies, in both life and general insurance, to go under? Hardly draconian, is it?

The public has to have confidence in our industry. The public only ever calls for a strong regulator when that confidence takes a battering. But the public will call for an even stronger regulator if its confidence is further undermined by poor regulation and company collapses.

And what signals are these collapses sending out to the public? The fundamental message is that insurers are not safe. Individuals are not safe when an insurer is due to pay them money under a third party's liability cover. And individuals are not safe if they put their money with insurers, whether for protection products or for investments.

This is serious. Insurers are hardly the most popular companies at the best of times. These failures make it worse.

If the insurance industry wants to avoid tougher regulation, it is going to have to step in to bail out these failing firms to ensure no policyholder is worse off. That will mean investing some cash. But if the industry cannot get its act together to sort this out, then it will justifiably face calls for the FSA to be beefed up.

The choice is between a rock or an even harder place.