I don't know the mechanicals of the Insight. You should be able to test whether regen is interfering by feathering the throttle (leave the car in gear). That's how we do it in the Prius. There can be significant drag in transmissions (the FEH uses a similar system to the Prius so no CVT really and not much in gears). Time to check the transmission oil in the Insight?

Pearl is a
2007 Driftwood Pearl Prius
Package "B" (everything but leather, nav, and rear camera)