An incoming regulatory body responsible for insurance companies will allow firms to collapse under a new approach.
A document outlining the remit and objectives of the Prudential Regulation Authority (PRA) revealed it will not seek to operate a "zero-failure" regime in its approach to insurers.
The PRA, alongside the Financial Conduct Authority, is set to replace the outgoing Financial Services Authority next year.
Failing insurers will be allowed to go bust with the PRA seeking "to ensure that any insurers that fail do so in a way that avoids significant adverse effects on policyholders".
The PRA also said it would categorise Britain's 1,000 insurers according to how big an impact their failure would have on the financial system, according to Reuters.
