LONDON—The London-based International Underwriting Assn. said insurers and reinsurers are in the midst of a “regulatory maelstrom” that is leading up to an important period of change.

In a policy statement released Tuesday, the IUA identified the most important legal and regulatory challenges facing its member companies and how it hopes to answer them.

Regulatory issues have moved up the market's agenda the past year “and the IUA has needed to monitor and respond to a growing number of developments,” IUA CEO Dave Matcham said in the statement. “We are now going through an important period of change that will have long-lasting implications for the way in which we conduct our business.”

The IUA said the interests of insurers and reinsurers must be represented within the Prudential Regulation Authority, which will take over regulation of the sector in 2012, and the Bank of England. Regulatory requirements should be tailored to reflect the fact that insurance and reinsurance do not pose systemic risks to the economy, the IUA said.

The association representing insurers and reinsurers also said there must not be regulatory overlap between the PRA and the Financial Conduct Authority, which also will begin operations in 2012 but will not be the main regulator for wholesale insurance.

In addition, regulatory costs must be minimized, the IUA added.

Among other concerns at the European level, the IUA said it believes the standard formula for capital requirements for nonlife companies under Solvency II should not impose “disproportionately high capital charges” on insurers and reinsurers.

Specific concerns for London market companies, such as the treatment of catastrophe exposures under Solvency II, must be addressed, it said.

The IUA also said the review of the E.U. Insurance Mediation Directive, which regulates insurance brokerages, should “promote disclosure and transparency.”

In the United States, the IUA said it hoped the relevant provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act would be implemented effectively and that the Federal Insurance Office would be operational very soon.

Large and international insurers should not be subject to special charges under Dodd-Frank, and demands made on non-U.S. insurers under the harmonized surplus lines reporting requirements should be “substantially reduced,” the London-based group said.

The IUA also called for a speedy finalization of the International Accounting Standards Board's standards for insurance contracts, and said the tax regime for the London market must remain attractive to clients and capital providers.

International insurance and reinsurance groups should be regulated on a groupwide basis, the IUA added, by a lead supervisor and college of supervisors, among other measures.