UK insurers 'will be allowed to fail' The Prudential Regulatory Authority (PRA), which will regulate the industry, will not "seek to operate a zero-failure regime," according to a paper laying out how it will approach insurers. Britain's insurance industry is concerned that regulators' focus on the collapse of the banking industry in 2008 has left the new regime short on knowledge of the insurance industry. The industry has been lobbying chancellor George Osborne to appoint a deputy governor at the Bank of England with specific responsibility for financial firms that are not banks. "We have always stressed that it is vital the PRA has people at the very top who understand the insurance industry, so we will look to see that the regulato delivers on its committment to have staff with strong and relevant expertise," the Association of British Insurers said. The PRA said its approach will "seek to ensure that any insurers that fail to do in a way that avoids significant adverse effects on policyholders." Mr Osborne is expected to name the successor to Sir Mervyn King, the current governor of the Bank of England, before Christmas. Sir Mervyn's term expires in June.