(FORTUNE Magazine) – In the insurance business, the storm season that batters the Florida coast each year is an unavoidable fact of life. But this autumn the entire industry was pounded by the arrival, far up the northern seaboard, of Hurricane Spitzer. In October, New York attorney general Eliot Spitzer filed a stunning suit against Marsh & McLennan, charging the world's largest insurance broker with rigging bids and collecting kickbacks from insurance companies. The fallout was swift and severe: Marsh chairman and CEO Jeffrey Greenberg has departed, and the company's stock price has cratered.

A broad swath of insurance stocks have been hit in the ensuing storm: The S&P insurance index plummeted by 15% before regaining some ground. But the bad news, say many observers, has resulted in some good buying opportunities.

Forget the brokers. They face not only regulatory and legal scrutiny, but many-- including Marsh and Aon--have announced that they will no longer collect payments from insurance companies whose business the brokers place with clients. That puts a major dent in their earnings--in Marsh's case, about one-third of the company's operating profit.

It's the insurance underwriters who are the potential bargains, though the continued investigations suggest that caution is in order. The Spitzer suits have "permanently changed the brokerage business, and margins are coming down as a result," says Bill Yankus, a managing director at investment firm Fox-Pitt Kelton. "But it hasn't really changed the underwriting side of the business."

One underwriter to consider: Hartford Financial Services Group (HIG, $62). The company has been named, but not charged, by Spitzer for allegedly collaborating in some of Marsh's bid-rigging schemes. (A spokesman says the company is cooperating with the investigation and has so far fired two employees over the matter.) But analysts say that Hart- ford's diversified earnings stream--it sells everything from personal life and casualty insurance to commercial insurance--insulates it from the scandal. The company's shares are trading at a low 1.3 times book value and 11 times expected 2004 earnings (well below the S&P 500 average price/earnings ratio of 18), making them "very cheap" right now, according to a Sanford Bernstein report.

Another favorite of industry watchers now is Allstate (ALL, $50). While the company faces steep claims related to this year's nasty hurricane season, Credit Suisse First Boston analyst Charles Gates estimates that 2004 will nonetheless be Allstate's best earnings year ever, thanks in part to continuing growth in auto and homeowner policies. In addition to a discount P/E of 11, Allstate offers a healthy dividend yield of 2.3%, making the stock "one of our best ideas from the standpoint of possible 12-month total return," noted Gates in a recent report.

Good growth prospects also make diversified insurance underwriter ACE (ACE, $39) a smart buy right now, says Yankus. The company (whose CEO is Evan Greenberg, brother of former Marsh executive Jeffrey and son of Maurice Greenberg, who heads up insurance powerhouse American International Group) has also been cited--but not charged--by Spitzer as a party to the Marsh bid rigging. (Like Hartford, ACE has fired two employees over the matter.) ACE is currently trading at a P/E of only ten times estimated 2004 earnings, and, unlike the scandal-tarred brokers, it is not giving up a major revenue stream. The company also pays an above-average dividend yield of 2.1%. Considering that the shares trade at only 1.3 times book value, the stock is a good--though somewhat risky--bet, Yankus contends. "They truly are one of the few companies that have a global platform on which to grow," he says.