Liquidators for Independent Insurance are believed to be considering cancelling all of the insurers' policies from an as yet unspecified date.
The move would enable Pricewaterhousecoopers to salvage as much of the insurer's assets as possible.
However, it would mean new claims submitted after the specified date would not be paid by Independent.
Pricewaterhousecoopers was unable to comment on the speculation.
The Policyholders Protection Board would step in to pay some claims should Independent be unable to honour them, particularly personal lines claims up to 90% of their value and compulsory insurance claims (such as employer liability claims) up to 100%.
But commercial lines claims would have to wait for the liquidator's findings.
A source close to the board said it was normal practice for any defunct insurance company to cancel policies in the event of liquidation.
