Insurance companies - long considered the most conservative of financial institutions - are having trouble. They have come to it later than the savings and loan disaster and the rash of bank failures in recent years, but the same kinds of problems are now surfacing.

Forty-three insurance firms went under between 1986 and 1989. At least 26 more have failed this year and several of the industry giants are showing signs of serious financial stress. Some have announced extensive layoffs of employees.Of course, unlike banks and the S&L mess, the insurance companies are not backed by federal dollars and the taxpayer is not directly at risk. But 2 million people depend on the insurance industry for jobs and millions of others are policy holders.

In addition, the entire U.S. financial system depends heavily on insurance company investments. The industry controls about $1.6 trillion in assets. In 1988, for example, the insurance industry provided nearly half the financing for domestic corporate and foreign bonds, bought 17 percent of U.S. Treasury securities and financed 12 percent of all mortgages.

Insurance company problems stem from two sources. One is the same thing that plagued S&Ls and banks, namely, poor investment management. Investments are where insurance companies really make their profits. This has been coupled with growing competition and more kinds of insurance - forcing insurers to seek higher yield investments. Because insurance investments tend to be based over longer terms, the impact has been slower in coming.

The second problem lies in the areas of health care and liability insurance where costs have soared faster than the ability to make accurate forecasts and adjust rates. Catastrophic claims from Hurricane Hugo and the San Francisco earthquake within a month of each other in 1989 cost insurers more than $5 billion.

Unlike the S&Ls, insurance regulation falls almost entirely under the control of states. And insurers admit that state regulatory policies probably need to be improved in many instances. They generally don't want the federal government to rush in with expanded controls, although there is a movement in Congress to do exactly that.

Federal involvement could be a mistake that will only compound insurance industry problems. The industry appears to be facing a long period of consolidation in which the 5,000 insurance firms doing business in the United States may shrink to 1,000 within the next 20 years.

However, most of that will come through mergers, with no loss to policy holders or investors. An estimated 400 might become insolvent - that works out to an average of 20 a year - less than the number for 1990.

Better state controls - a movement that is already under way - combined with a natural tightening up of the industry ought to be the course followed. As long as no federal dollars are involved, federal regulators should stay out of the picture.