Insurers were this week submitting views on a proposal that could radically alter their investment policies.

A government-sponsored review, under the chairmanship of fund manager Paul Myners, is intended to make it easier for insurance companies to invest in venture capital and other unquoted companies.

The move has the backing of the Association of British Insurers, which this week made its own submission.

Insurance companies, together controlling £1,000bn in assets, currently put just 0.1% of funds into venture capital investment.

The treasury commissioned the review as part of a drive for a more entrepreneurial society.

The review is likely to bring about the change in investment policy by urging the removal of certain tax barriers to unquoted investment.

Myners will probably consider changes to trustee law and the minimum funding requirement for pension funds.

With the vast assets at the disposal of insurance companies, even a small percentage shift away from quoted companies would mean a large extra injection of funds into venture capital investment.

The conclusions of the review are due to be with the treasury ahead of next year's budget.