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The failure of the market and the Financial Services Authority to distinguish properly between the impact of the credit crunch and recession on the savings and investments activities of the insurance industry as distinct from the risk protection side means that the entire sector has taken a battering.
Investors are therefore missing a trick because they have not factored in the huge business opportunity for those insurance companies still standing brought about by the near-collapse of American Insurance Group, the world's largest insurance business.
It failed not because of problems in its conventional insurance activities but as a consequence of its disastrous decision to insure against default many of the complex derivatives at the heart of the current melt down.
The enforced contraction of such a major player presents a huge opportunity for its rivals to pitch for business which they would never previously have had a sniff at.
It goes further than that, though. Rates in the insurance market have been falling for some years yet there was no conviction in the industry this autumn at gatherings such as the Monte Carlo Rendezvous that they would soon begin to turn.
Since then, however, we have had the losses on Hurricane Ike and Gustav which turned out to be the worst since Katrina, and every bit as significant as the AIG debacle.
The result is a significant reduction in capacity in the global insurance business, which brings with it the opportunity in selected lines for insurers to push for better pricing.
They have the further incentive to get this right because income from the other side of the balance sheet, the investment returns, is low and likely to remain so. In the absence of this crutch, there will be no substitute for properly priced underwriting.
It matters too that there has been a marked difference in the way the insurance and the banking sectors have reacted to the change in economic conditions.
Banking has gone for consolidation, with the weak being taken over by the less weak and occasionally the strong. Insurance has gone for risk diversification, so that instead of taking the full 100% of a slice of business on its books, one company will retain up to 30% and sell on the rest, thereby spreading the risk around the market for the greater comfort of itself and its clients alike.
This is, of course, the technique that has been used in the Lloyd's subscription market for years so it plays into the hands of firms such as Amlin, Hiscox and Omega, all of which have the skills and reputation to be the lead underwriter on such business. So they will most likely show the way to better pricing and also lead the charge to win some of the spoils from AIG.
The final factor playing into the hands of the independents is the mild backlash which has followed the decision a few months ago that Aon and Benfield should merge. The logic of this deal was and continues to be that the combined group could offer an unrivalled range of products and advice to its global clients - to seek to become the Goldman Sachs of insurance broking, as was said at the time.
But just as with Goldman Sachs, clients get nervous about being too dependent on one financial adviser. So there is a growing willingness among the insured to look elsewhere to retain a degree of choice and diversity. The insured want a range of markets offered and a spread of underlying carriers - which again leads them towards London-based independents.
This is not unalloyed good news. In the current economic climate insurance is as subject to cost pressures as everything else. But at a time when the outlook is bleak for so many businesses in the financial sector, it is encouraging to find one about which there is something good to say.
Misplaced intervention
The thrust of the intervention by the two retired Scottish bankers Sir Peter Burt and Sir George Matthewson into the Halifax Bank of Scotland affair seems to be that HBOS is being sold much too cheaply,
They argue that this is the more so when it could avoid the need for any takeover at all, with the help of additional capital provided by the Government.
The interesting aspect of this is that Lloyds TSB's share price was trashed when it agreed to rescue HBOS, and it has stayed trashed even when the takeover terms were tilted even more in Lloyds' favour.
So the market believes that HBOS is too expensive almost at any price - quite the opposite of the opinion of the two interventionists.
One suggestion over the weekend was that the arrival of the pair might force Lloyds TSB to sweeten the terms to prevent them attracting support from disgruntled shareholders.
Pigs are more likely to fly. Any such move in that direction would infuriate Lloyds' own shareholders who would consider it much cheaper simply to ignore them.
