The biggest challenges facing the insurance industry in the future are heightened regulatory reforms, the global economic situation and the increasing number of natural catastrophes, according to Ace vice-chairman John Keogh.Speaking at the Insurance Day Summit held yesterday at the Fairmont Hamilton Princess, Mr Keogh warned that the sector had a history of being complacent and needed to take heed of the growing list of issues which could significantly impact insurers’ bottom lines.Citing regulation as the single largest risk threatening the sector today, he said that with the multitude of regulatory initiatives underway globally, most worrying of which was a lack of co-ordination between regulators working on them.Mr Keogh said that while he appreciated the need for increased regulation in light of the American International Group bailout, he questioned the logic in bankers driving the regulatory changes for the non-life insurance business despite coming out of the financial crisis much worse than their insurance counterparts and whether they understood the risks involved.With Solvency II looming large on the horizon, he said that there were a number of unanswered questions that needed to be addressed, particularly about concerns over the establishment of different capital requirements between companies in turn creating an unlevel playing field.Other factors which could potentially effect the market included a dysfunctional level of group supervision, and pressure from governments on companies to hold more capital against their risks in the event of any problems, all adding to the burden of insurers, said Mr Keogh.Meanwhile trade protectionism among many nations was also hurting competition in previously open markets which had enjoyed increased capacity and reduced prices as a result of foreign companies being allowed to enter, he added.Focusing on the world economy, Mr Keogh said that despite being more stable than two years ago, it was still not out of the woods yet with the European debt crisis and rising unemployment in the US, as well as the potential for bubbles to explode in the emerging markets.“With Europe and the US there are trade and budget deficits, high unemployment and unsustainable debt levels,” he said. “I think the worse may still be in front of us.”Mr Keogh said that the developed and developing countries each had their own set of challenges from slow growth and a depressed housing market in the former and a strong export driven expansion led by global demand for commodities, job creation and surplus in the latter.He said that a record number of natural disasters so far this year had taken their toll on the underwriting results of many insurers and entering the hurricane season there were some uncertain times ahead, with numerous companies re-evaluating their appetite for risks.