A majority of insurance executives and analysts believe the fallout from an industry-wide regulatory probe will be positive, according to a Standard & Poor?s survey conducted yesterday.

Of 100 respondents, three-quarters said they thought the long-term effect of regulatory scrutiny led by New York Attorney General Eliot Spitzer would be a better business environment.

The biggest concern for the insurers and analysts polled was not the regulatory environment but how to maintain profitability during the current soft market conditions of lower pricing and stiffer competition.

Insurance specialists were surveyed at the annual Standard & Poor?s Rating Services insurance conference taking place this week in New York.

?It?s becoming apparent that the costs of fines and insurance settlements will be manageable, so survey respondents are likely looking past the near-term impact towards the benefits of better disclosure by chastened insurance executives,? said S&P managing director Steve Dreyer.

Mr. Spitzer?s insurance probe goes back to early 2004 when he started investigating the business practices between insurers and the brokers who sell policies on their behalf.

A controversial civil suit against leading broker Marsh & McLennan was settled early in the year through establishment of an $850 million compensation fund. Other brokers later negotiated similar but smaller settlements with Mr. Spitzer.

In recent months, Mr. Spitzer and other regulators expanded the probe to scrutinise how certain non-traditional policies are used and accounted for. Commercial insurance giant American International Group (AIG) has largely been the focus of this latest phase of the investigation.

S&P conducted its poll following a CEO panel session on Monday where the top management of some leading insurers concluded the Spitzer investigation would result in greater transparency and public confidence.

On that panel was XL Capital?s Brian O?Hara who agreed the investigation could be positive. Mr. O?Hara has been vocal in support of what the investigation can achieve, including possible mitigation of the wide market swings between high and low pricing that insurers have long grappled with.

On top of dealing with increasing regulatory scrutiny ? most insurers have been on the receiving end of regulatory subpoenas tied to the probe ? the industry is also roughing it through another infamous ?soft market? where pricing constricts and terms and conditions tighten.

Mr. Dreyer said: ?Our audience remains focused on the corrosive effects of weakening pricing and terms on the financial health of insurers?.

A spate of controversial corporate failures in recent years have added another weight to public companies in the shape of increasing disclosure requirements carrying a heavy time burden and price tag.

In total, 39 percent of those surveyed by S&P said increasing price competition was ?the issue that most concerns them?.

But regulatory worries were on the spectre with 37 percent of the respondents saying regulatory risks were a ?major concern?.

The chief executive panel also raised US legislative woes including the need for greater tort reform measures as well as concerns that no extension of a federal terrorism reinsurance backstop ? the Terrorism Risk Insurance Act (TRIA) ? has been hatched. TRIA is due to expire at the end of the year.