The CII will spend upto £20m over the next four years in a bold plan to evolve into a new professional body, issuing guidance on industry practice standards to its members.
CII director general Sandy Scott said the recent consultation on the institute's corporate governance was "only part of the bigger picture".
"With the FSA making it clear it is moving towards a more principles-based regulatory regime, we as the industry's professional body should play a major public role in issuing guidance and setting up codes of conduct for best practice," Scott told Insurance Times.
"From the recent gap analysis of our internal governance structure, we have been found wanting. More transparency is needed and some of the institute's processes are dated.
"The CII must, and will, change to become a transparent, modern professional body," he said.
The key areas are: a lack of transparency on how members are elected to council and committees; a lack of representation from the broad CII membership; and a lack of an unified board structure, which at present consists of 46 members and no consumer input.
The CII review, Scott said, was similar to other professional standards reviews over recent years such as Higgs, Nolan, Clementi, Cadbury and Greenbury.
"We asked Lord Hunt of Wirral to help, as he instigated the Nolan Report into standards in public life while in government. A governance sub-group, led by him, advised that the CII fell short of the Langlands Report recommendations. Which is why we are beginning our roadshows in October to talk to the membership," said Scott.
It is understood the CII will raise these issues with the FSA, though Scott would not elaborate.
"I think the main areas for us to concentrate on in the future are the issues surrounding commission disclosure and TCF.
"This is where the CII can add value in guiding those floundering with the FSA principles," he added.