The City watchdog has asked insurers and brokers to inform on firms that they think are committing fraud.
The Financial Services Authority (FSA) is particularly concerned about brokers failing to pass on premiums and falsifying customer details.
In addition, the FSA wants to be tipped-off when brokers issue bogus insurance documents.
Since 2005 the FSA has acted against several brokerages for behaving dishonestly.
The FSA wants insurers and brokers to write to them when they suspect anything untoward with firms they deal with.
As a result, it hopes to take action more quickly and prevent consumers being taken for a ride.
In the past there have been instances of consumers being sold bogus insurance policies and only realising that they have been hoodwinked when trying to make a claim.
Both the Association of British Insurers and the British Insurance Brokers Association welcomed the FSA initiative.
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