Insurers could scrap 'mixed-use' policies if the FSA does not revise its rules on customer classifications.
Under its broker regulation rules, the FSA requires that retail customers must be given more information than commercial customers.
As it stands, customers buying mixed-use policies, which cover them for both commercial and private purposes, will be classified as retail customers.
ABI head of market regulation Chris Hannant said that a meeting was held this week with the FSA as a "last attempt" to get it to reconsider the definition.
Insurers argue that providing the additional information to such customers will be an expensive and time consuming task. But to date the FSA has said that it will not look at changing the rule before regulation begins on 14 January 2005.
Sources said that if it does not, several insurers are looking at scrapping mixed-use policies and forcing affected customers to buy two separate policies.
Hannant said: "One option is not to offer mixed use policies. Each insurer will address the issue as they see fit."
An FSA spokesman said: "It is a commercial matter for insurers."