Insurance buyers must take the responsibility for choosing healthy insurers and should not rely on state regulators, agents or brokers to alert them to likely insolvencies, a panel of experts said Monday.

This is a bomb waiting to explode, Eric P. Hein, vice president and senior consultant at Corroon & Black of Illinois, said at the annual meeting of of the Risk and Insurance Management Society, a New York-based trade association.John E. Washburn, Illinois insurance director, said insurance regulators need better information from insurers to target and solve potential insolvency problems earlier.

Mr. Hein said risk managers should analyse insurers' annual financial statements themselves to look for cash flow problems and poor underwriting decisions.

It rests on your shoulders to become more involved, he said.

Mr. Hein outlined five areas to help risk managers analyze carriers. They are:

* Cash flow. Check cash from underwriting. Companies at least should have had strong cash flows from premiums brought in during the hard market of the mid-1980s.

* Investments. Check to see if the company decreased its investment portfolio to meet cash flow needs.

* Business mix. What types of liability does the insurer underwrite and has that changed recently? The carrier may accept riskier long-term liabilities to pay for present cash flow needs.

* Reinsurance for surplus relief. Check the ratio of ceded reinsurance to the ceding commission. About 7 percent to 17 percent is average.

* Historical data. Check the combined ratio.

* Loss reserves to surplus ratio. If it's over four to one I start to think about it, Mr. Hein said.

He also suggested the following areas of information to use in making decisions about the strength of the company: stockbrokers, the grapevine, changes in auditors, timeliness in claims payment, key personnel changes and market pricing.

The number of financially troubled insurers, Mr. Hein said, is shocking. The federal Tax Reform Act of 1986, which will cost the industry an estimated $6 billion this year, will accelerate the problem, he added.

Mr. Washburn, who also is president of the National Association of Insurance Commissioners, said buyers should not depend on state guaranty funds to protect them from insolvent insurers.

The funds were set up to protect unsophisticated insurance buyers, Mr. Washburn said, adding that the traditional insurance companies are paying for claims they never envisioned.

Mr. Washburn pointed to reserves as the first problem for companies with

financial troubles. It's more art than science, he said. You get what you pay for.

The National Association of Insurance Commissioners is working at the national and state levels on the problem of insurer insolvency, Mr. Washburn said.

The commissioners' IRIS lists (Insurance Regulatory Information System), a secret list of potentially troubled insurers that was published by The Journal of Commerce, should not be the only measure of financial problems, Mr. Washburn said.

Regulators also need to analyze reserves, uncollectible reinsurance, connections between brokers and insurers and managing general agents, he said.

James P. Quinn, executive vice president at North American Reinsurance Corp. said the amount of uncollectible reinsurance is a problem and should be included as part of the overall financial health of a primary insurer.

The past problems will remain with us, Mr. Quinn said.

He said that long-term liabilities, such as asbestos and pollution liability, take a long time to become apparent, making the question of reserves that are set aside important.

We must look long-term to protect our balance sheet, Mr. Quinn said.

David H. Remes, a lawyer with the Washington firm of Covington & Burling, said state guaranty funds have many exclusions and filing requirements.

Some states won't pay if the policyholder isn't headquartered in the state, Mr. Remes said.

There's going to be a continuing wave of insolvencies, Mr. Remes said.