Insurers have criticised the government for failing to regulate the sale of holiday insurance and warranty insurance.
The ABI said the Treasury's stance could result in some insurance products being unregulated. It added that the industry has already warned against an inconsistent approach between different market sectors.
A Treasury consultation document yesterday set out the proposed regime for general insurance products, which will take effect when the FSA takes over responsibility for regulation in 2004.
Mary Francis, director-general of the ABI, said: "Any system for the regulation of general insurance sales must be all-embracing.
"Regulation must support genuine competition in the market, allowing insurers to continue to offer products to meet the changing demands of our customers.
The announcement comes a week after insurer, Warranty Direct, warned consumers they stand to lose a total of £50m in the run up to Christmas if they buy extended warranties from electrical retailers.
The insurer claimed consumers pay on average 38% more for a policy over the counter.
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