The Chartered Insurance Institute (CII) must lead the way in adapting to FSA regulation, said director general Sandy Scott.
He said the job of the CII was not just determining good practice for the industry, but was also setting standards and providing leadership.
"We are not here to maintain the status quo," said Scott. "We are not a regulator; we are a guide and a mentor. We now see our role as bringing about change and providing individuals and businesses with the tools to make those changes."
In a speech at the inaugural FSA Training & Competence conference on the impact of new regulatory requirements, Scott said the start of regulation required a "sea change in thinking" from the insurance industry.
Commenting on the impact of regulation on the industry, Scott said: "We are moving away from what I call Ten Commandments-style regulation - regulation based on explicit rules, on `thou shalts' and `thou shalt nots' - to regulation based on a series of high level principles and guidance. This is to be welcomed.
"It's a move from what might be deemed `bureaucratic regulation' - and I use bureaucratic not in a pejorative way, but in the true sense of the word: `a system of management based on rules, checks and balances' - to `smart regulation' or `intelligent regulation'.
"High level commitments are laid out. How a company gets there is up to that company. Now that's empowering in many ways. It gives us a degree of freedom in the way we manage our own businesses. But equally there are new risks and new responsibilities, particularly for senior management."
