LONDON—Global financial services regulatory changes are needed, but any new rules developed for banks should not be automatically applied to insurers, insurance trade groups said this week ahead of a meeting of global financial leaders in London.

In a letter sent to U.K. Prime Minister Gordon Brown, chairman of the Group of Twenty summit scheduled to begin April 2, the groups said that insurance market participants are willing to work with governments, regulators and other agencies to improve regulation of financial services, a topic that will be part of the discussion at the meeting. But the associations noted that the insurance market functions differently from banking.

"While not immune to the financial crisis, with very few exceptions, the insurance industry has entered this crisis from a position of relative strength. It is therefore important that solutions devised to solve problems in the banking industry are not automatically applied to insurance," the letter states.

The letter was signed by the Assn. of British Insurers, Assn. of Bermuda Insurers & Reinsurers, American Council of Life Insurers, Canadian Life & Health Insurance Assn., Dublin International Insurance & Management Assn., The European Insurance & Reinsurance Federation, and the Insurance Bureau of Canada.

The groups also said the financial crisis has made clear the need for regulators to use a risk-based supervisory approach.

In addition, economic turmoil has raised awareness of the hazards of inadequate monitoring of international groups, the trade groups said. "The inconsistency of having a globalized insurance industry on one hand and a siloed national approach to regulation on the other must be reconciled," the letter states.

In a separate letter, the Comité Européen des Assurances also called on the G-20 representatives to take into account the differences between insurance and banking in examining regulatory changes.

"It is of utmost importance that solutions designed to solve problems in the banking industry are not automatically applied to insurance," Tommy Persson, president of the CEA, said in a statement.

Separately, the Geneva Assn., the Switzerland-based insurance industry think tank, released a letter co-signed by the chief executive officers of nearly 50 of the world's largest insurance and reinsurance companies to the G-20 participants.

In their letter, the executives stress that regulation should take into account the specific characteristics of the insurance business model, avoid pro-cyclical effects—such as regulatory requirements that might compound a problem during an economic downturn—and strike an "appropriate balance" between financial stability, consumer protection and fair competition.

The Geneva Assn. said that, unlike banks, insurers had weathered the recent crisis well and are pre-funded by premium payments, making them much less susceptible to a "liquidity panic" as recently experienced in the banking sector.

The association also called for more flexible accounting systems at times of extreme illiquidity.