The FSA will examine how the insurance sector is mitigating the risk of fraud in the new year.

Speaking to delegates at an ABI fraud conference this week, Edna Young, FSA financial crime sector manager, said the regulator was preparing to crack down on financial crime.

She said: "FSA staff will attend workshops on fraud, and then they will look at financial crime risks and how they are being managed by companies in arrow visits."

Young said once fully trained, 'arrow visit' supervisors would have the "ability to probe more".

She said she believed this would give the regulator and the market a clearer understanding of how fraudsters were operating in the market.

The regulator also plans to publish what it has uncovered in the arrow visits to give the market examples of what it terms good and bad practice of fraud handling processes.