The European Commission is ready to consider bringing infringement proceedings against the UK government over its application of European insurance regulations.
The infringement proceedings will be related to the UK's regulation of Lloyd's but Roy Perry MEP said questions also needed to be raised over the collapse of Independent Insurance.
Perry, who is vice president of the European Parliament's petitions committee, has written to European Commissioner Fritz Bolkestein to ask if the UK was observing the 1973 European Insurance Directive.
He said the Independent crash could indicate a “wider malaise in British insurance regulation”.
“With these latest revelations, I think the British government must be getting very worried indeed,” Perry said.
“The directive requires insurance companies anywhere in Europe to have reserves to cover their liabilities. I've now written to Bolkestein to ask him whether he is satisfied that the British government has been observing the directive with respect to Independent.”
Bolkestein has refused to release a detailed dossier on Lloyd's, given to him by the Treasury, because it could be used in infringement proceedings.
The Treasury has also said the document, relating to its application of the directive in respect to Lloyd's, is confidential.