DANA POINT, Calif. — Global regulatory convergence could have unintended consequences for the U.S. property/casualty insurance industry, according to experts discussing the issue during the Property Casualty Insurers Association of America's annual meeting in Dana Point, Calif., on Monday.

Regulatory change is one important consideration for insurers, but whether regulation will change behavior is a more important consideration, said David Mocklow, principal and chief operating officer of New York-based Elanus Capital Management.

To the extent that there is a convergence of regulatory approaches, European initiatives such as Solvency II and Basel III will have an impact on U.S. insurers, said Mark E. Watson III, president and CEO of Hamilton, Bermuda-based Argo Group International Holdings Ltd. But Mr. Watson cautioned that implementation of Solvency II in particular is no sure thing.

“It started looking likely a couple years ago that Solvency II would never be implemented,” said Mr. Watson, calling the proposed solvency regulatory standards “a political hairball.” But he said that implementation has been pushed back yet again, and “I'm not certain where that leaves us.”

William Donnell, president of Swiss Re Ltd.'s U.S. property/casualty operations, said banking capital standards should not apply to insurers. “Hopefully, sense will prevail,” he said.

“You don't want to be part” of a systemic risk regulatory system, said Mr. Watson. He said that only a couple of P/C insurers in the United States would likely be placed under such a regulatory regime. “To the extent that we can keep our balance sheets competitive and nimble,” smaller insurers could have a competitive advantage over larger ones, particularly those tied to banks, he said.

Mr. Donnell said that being designated as a financial institution that the government deems “too big to fail” could signal that the institution would enjoy government backing. But having to maintain higher capital levels could lead some insurers to pull back from some product lines.

That would create new opportunities for smaller insurers, said Mr. Mocklow.

There could be new opportunities for insurers in credit-related products, he said. But that could lead banking regulators to take another look at insurers and lead them to consider whether they should regulate insurers.