In its new report, Restoring Market Confidence, the ABI says that any changes should tackle the problems that arose in the banking sector, but should not apply to the rest of financial services.
The ABI report also argues that regulation must not inhibit the ability of firms to offer competitive products for consumers, or add unnecessary costs to businesses.
The report comes ahead of the deadline for consultations to the Turner Review on June 15.
The ABI says an area of concern to insurers is the lack of recognition for the prudential regulation of UK insurers and the developments under Solvency II of risk assessment modelling across the EU.
ABI director general Stephen Haddrill says: “Insurance is not banking and should not be regulated in the same way. We need targeted sector-specific changes, and not a lazy adoption of banking rules to other parts of the financial services sector.
“If this happens, UK-based insurance companies will suffer the damage to profitability, prosperity and innovation for a generation. As a global leader and major UK employer, the consequences of this would be felt throughout the British economy and beyond.”