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NEARLY THREE YEARS AFTER Electric Mutual Liability Insurance Co. jumped offshore and closed up shop, the Massachusetts Supreme Court has ruled that state insurance regulators have no standing to undo the move to Bermuda and assume control of the insurer.

The ruling may seem moot to many, as the reinsurers that cried foul over EMLICO's redomestication and pressured regulators to try to regain control of the General Electric Co. insurer have since settled their claims with EMLICO and withdrawn their opposition to the move.

The reinsurers' basic charge, from the start, was that GE and EMLICO engineered the redomestication to take advantage of Bermuda's winding-up procedure, which allegedly would make the reinsurers liable for claims much faster than under Massachusetts law.

However, the settling reinsurers no doubt ultimately decided that the huge legal costs and uncertainties involved in fighting the move outweighed the potential gains, and they made a business decision to cut their perceived losses. Any of the time savings from a slower liquidation quickly evaporated in the face of the long-running legal battle.

The liquidators and GE no doubt are relieved that the estate's assets will no longer be depleted by litigation, leaving EMLICO's remaining funds for their intended purpose, which is meeting claims.

But while the Bermuda liquidators and GE may be pleased, or at least willing to live, with the outcome, there is a key question left unresolved: Did EMLICO and GE subvert state regulation in their original petition seeking to redomesticate offshore, in which EMLICO claimed solvency, or did regulators merely exercise poor judgment in not questioning its liabilities?

That is an issue that has yet to be satisfactorily explored and laid to rest. While several reinsurers leveled allegations of fraud over EMLICO's petition to move to Bermuda as a solvent company, their settlements effectively put the matter aside.

Other reinsurers still challenging EMLICO claims will surely raise the fraud charge themselves, but their disputes will be handled in private arbitration. As a result, any evidence they present or defenses offered by the insurer will be sealed from public view.

Is there a public interest in resolving these questions about EMLICO's and GE's conduct? We believe there is: It is to ensure that a regulatory system intended to protect policyholders is not undermined by parties gaming the system for their own advantage.

EMLICO is unique in that it has a single policyholder: General Electric, its owner. With the insurer's owner also the only policyholder at risk, some might question whether there is any point to continuing to seek the truth about what happened.

But the precedent set by this case is one that could have harmful ramifications if other companies with many more policyholders seek approval for similar wholesale reorganizations without first acknowledging their liabilities.

We urge the Insurance Department to conduct a full and open investigation into the circumstances of the move to Bermuda from Massachusetts and its aftermath. Just as important is that Insurance Commissioner Linda Ruthardt issue a full and public report. The inquiry should not become part of a confidential examination of former EMLICO unit Electric Insurance Co., as Ms. Ruthardt earlier proceeded to do. The charge that EMLICO and GE subverted state regulation should be publicly proved or publicly laid to rest.

Given Massachusetts insurance regulators' role in approving the move, we think they should hire an independent investigator. This is particularly important given Commissioner Ruthardt's assertion last year that she was pressured by her boss to keep her hands off EMLICO after the controversy erupted.

We don't deny that Bermuda offers an attractive option for a company looking to run off an essentially captive book of business: the creditor control and relative speed of its winding-up procedures. U.S. liquidations are slow by comparison, and attempts to accelerate them have either failed -- as in the Mission Insurance Co. case -- or become bogged down in litigation.

Even so, if EMLICO knew it was underreserved and planned to take advantage of the Bermuda regime, it should have forthrightly described its plans to state regulators.

If EMLICO and GE instead withheld pertinent information to avoid a Massachusetts liquidation, they should be publicly held to account and sanctioned in a way significant enough to deter similar conduct in the future.