Structural change, regulation and political risk are the most pressing insurance industry topics for 2016, according to one senior Lloyd's executive.

Some longstanding trends are forging change in the industry

“The issues we're facing into, whether that's surplus capital, the low-interest-rate environment, historically low catastrophe activity and low attritional losses, these are features of the industry we've been dealing with for many years now,” said Sean McGovern, chief risk officer and general counsel for Lloyd's of London.

“My No. 1 risk is looking at some of the structural changes that these longstanding features that we've been dealing with are now starting to drive within the business,” said Mr. McGovern, citing mergers and acquisitions as an example.

“We are seeing M&A transactions on the distribution side and the carrier side, and we've seen our fair share of those within the Lloyd's market in the last two years,” said Mr. McGovern.

Regulation is also a chief concern.

“No. 2 on my risk agenda is, unsurprisingly, regulation,” said Mr. McGovern. “In Europe we've just seen Solvency II go live after 10 or more years of development.”

He also noted the debate over international capital standards and the relationship between U.S. and European regulators.

“There is a huge expectation on the part of the industry both in Europe and the U.S., that the respective regulators will finally work out how they will mutually recognize each other's system of regulation,” said Mr. McGovern. “And there's a huge prize there, because if you can get the two largest insurance markets in the world to find a way through their differences, that's a huge example to regulators around the world.”

Political risk is a topic of growing concern.

“If we go back a few years ago, when we talked about political risk we were talking about risks that were happening in faraway places with unstable democracies,” said Mr. McGovern. “Now, it seems political risk is really everywhere — an example being the referendum in the U.K. on our relationship with Europe.”

Business diversification is also on Lloyd's agenda.

“One of the things we've been very clear on in our strategy is we want to diversify the nature of the business that joins Lloyd's to be more reflective of the global economy,” said Mr. McGovern.

“So, we have a strategic intent to attract onto the Lloyd's platform players from key fast-growing economies around the world which at the moment are quite domestically orientated,” he said, citing China and Brazil as examples.