Investors are said to be borrowing shares in major companies including CGNU, Royal & SunAlliance, Prudential and Legal & General.
Traders intend to sell them before full-year results are released next week. They are hoping to buy the shares back at a lower price and make a profit.
This activity led to share prices falling. CGNU fell 16 to 797p, Royal & SunAlliance were down 10 to 294p, while Prudential dropped 32 to 682p.
The move was prompted by Belgo-Dutch insurer Fortis' profit warning yesterday which sent shockwaves through the market.
