Insurance shares fell by up to 20% yesterday as concerns mounted that their solvency levels were coming under pressure due to the tumbling equity markets.

The Financial Services Authority admitted that is talking to the insurers about their solvency positions amid fears that the financial crisis was spreading to the insurers.

A spokesman at the regulator said: 'In light of the current market conditions, we are, of course, working with all our major companies to assess the implications for them.'

The Independent