UK insurers and brokers have pushed back against tighter supervision by their regulator.

The Association of British Insurers (ABI) has warned against a “predator-prey” relationship between the industry and incoming regulator the Financial Conduct Authority (FCA), while the British Insurance Brokers’ Association (BIBA) says the regulator should focus on problem areas, rather than insurance.

The FCA will be created when the Financial Services Authority (FSA) is split in two next year.

FSA MD Martin Wheatley, who will lead the FCA, says the new regulator will adopt a pre-emptive rather than reactive approach.

“This is about identifying and heading off issues before they turn into big problems for consumers,” he told an ABI conference. “We will combine regular assessments of your firms with a better way of dealing with issues across firms, and a faster way of reacting to events as they occur.”

Mr Wheatley says the FCA will step in without consultation if it needs to act fast to stop consumers buying a product.

He has criticised low-value general insurance products that are poorly designed, sold to the wrong people and provided poor claims and complaints handling.

But BIBA CEO Eric Galbraith says the regulator needs to target problem areas such as lenders and organisations whose main businesses are not insurance.

He says BIBA members take regulation very seriously but are concerned about the cost of it, having been badly bruised by Financial Services Compensation Scheme payments after other organisations mis-sold credit insurance.

Brokers’ levies for the scheme have risen because of the actions of credit brokers.

ABI Director-General Otto Thoresen says the insurance industry wants to work in partnership with the FCA to ensure regulation delivers for consumers.

He says the industry has been resilient through the financial crisis and continues to pay out more than £190 million ($295 million) a day.

“We face a new normal, with the challenges of an ageing population, a squeeze on household and public budgets, low interest rates and low growth,” he said. “Insurance has always been about developing solutions for these challenges and the work of the new regulator must support us to continue to do this.”