insurance industry has dedicated to the Y2K fix.

The Millennium Bug, as long was feared, has become a multi-billion dollar pest, as increasingly expensive programmers race against time to correct an oversight embedded in information systems since the dawn of modern day computer technology.

The deadline is looming when many computers that tell time by using a two-digit year, instead of a four-digit year, may not correctly identify the year 2000.

An article published today in BestWeek analysed third-quarter Securities and Exchange Commission (SEC) filings and found the first detailed glimpse of the compliance price tag and real fears held by insurers about future costs.

Cost of computer bug clearer Public companies in the recent reporting period had to reveal if Year 2000 preparations were complete, and if fallout from possible computer problems could have a "material'' effect on financial results.

Nearly all publicly traded insurers were required to address the issue, since nobody can be sure they have prepared for every possible Year 2000 computer complication, both internal and external.

Companies were required to detail four elements, including: the company's state of readiness; costs to address Year 2000 issues; risks of a company's Year 2000 issues; and, contingency plans.

BestWeek reviewed filings by the top 30 insurers in all lines, as listed by revenue in the "1998 Best's Holding Company Guide: GAAP, US.'' The analysis showed that the largest publicly traded insurers in the US -- representing 80 percent of the revenues generated by all 200 US stock owned insurers -- have committed as much as $1.79 billion to Year 2000 preparations.

Even the most prepared companies have spent millions. The largest insurers with the largest installed base of legacy computers have spent hundreds of millions.

Insurers outlined how much had been spent to date, and how much is expected to be spent in the next five quarters before the millennium.

All warn investors that insurers could be affected by unforeseen Year 2000 computer problems at the vendor, supplier and insured level.

BestWeek said: "Most have contingency plans, which typically involve rehearsing the conversion through computer simulations, then marshalling their information technology staffs for intensive repair efforts. Most admit even these contingencies may not be foolproof.

"Some companies, such as Allstate, have used their Year 2000 expertise to their advantage. In its filing, Allstate describes how its programmers finished a Year 2000 conversion a year ahead of schedule and below projected cost.

"They also developed an in-house Year 2000 software conversion product that has since been marketed to other companies through a relationship with International Business Machines Corp.

"Some almost go out of their way to paint a worst-case scenario. For instance, Progressive details its matrix of relationships with 330 third parties with which it exchanges data. If all goes wrong, Progressive's distribution will suffer, motor vehicle reports may become unavailable, claims could be delayed and losses may become more frequent and severe.

"Progressive and others are obviously aware of one purpose of the SEC's directive: to head off possible lawsuits from investors whose lawyers might claim that companies ducked the issue.

"If all does indeed go wrong, it will be tougher to prove that the insurance industry painted an overly rosy picture of Year 2000 readiness.''