Sir Howard Davies, chairman of the financial services authority, has urged the EU to adopt a lighter touch to financial services regulation.
Speaking at the lord mayor's City banquet, he said the industry is: "at a delicate moment as far as the regulatory system is concerned."
Adding that the insurance sector needs to speak more clearly in defending its case, he said: "there is a serious risk of ratcheting up regulation in a way that could have damaging consequences."
Sir Howard welcomed the EU's original plans to open insurance markets and dismantle competition barriers. But he warned: "A general commitment to openness and flexibility has turned into a Financial Services Action Plan made up of 42 lengthy and detailed directives.
"The Commission has now moved beyond the easy win territory into some areas where European legislation is much more problematical."
