NEW YORK—The insurance industry is better off than last year but still faces issues ranging from regulatory reform to inflation, experts said during a panel discussion last week at the “Property/Casualty Insurance Joint Industry Forum” in New York.

While regulators have passed laws in recent months, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act, more changes are developing in the wake of the financial crisis. For example, New York Gov. Andrew Cuomo early this year proposed merging the state's Insurance Department, Banking Department and Consumer Protection Board into an agency tasked with providing consumers with access to financial services at competitive rates, among other things.

“He's going to be a governor you can speak to,” said James J. Wrynn, superintendent of the New York State Insurance Department. “He gets it. He knows that in New York, we have to be business-friendly.”

In today's global market, the state could lose business to anyplace in the world, so “I think you'll see a real movement in the right direction for the industry” given the environment in New York, Mr. Wrynn said at the conference hosted by the New York-based Insurance Information Institute.

As for the Federal Insurance Office established under Dodd-Frank, Mr. Wrynn said the industry is always monitored to identify changes that can be made to improve it.

Others were more pessimistic.

“When push comes to shove, federal regulation was, is and always has been a catastrophe,” said Brian P. Sullivan, editor of the personal and commercial auto insurance newsletter Risk Information Inc.

Among other regulatory changes the panel discussed was Solvency II, the European regulatory regime for insurers that is to get into effect in 2012. Solvency II “will have a profound indirect impact on the U.S. market,” said Leo Grepin, New York-based senior partner and property/casualty insurance practice leader at McKinsey & Co.

Several large U.S. companies are adopting part or all of the requirements, so they'll be building a type of “shadow” Solvency II compliance, he said.

The industry is in “a better spot than a year or two ago, but I think a number of unanswered questions still exist,” Mr. Grepin said. As an example, he cited the Federal Reserve Bank's need to prop up the economy with low interest rates sets up the medium-term risk of inflation.

Despite noting numerous challenges, some panelists suggested last week that insurers might have learned some lessons from the tough economy.

Vincent J. Dowling, managing partner at Dowling & Partners Securities L.L.C., a Stamford, Conn.-based institutional stock broker specializing in the U.S. reinsurance, said property/casualty insurers were “the last man standing” during the financial crisis. But even insurers that had “rock-solid” balance sheets saw that if a catastrophe happened, they wouldn't be able to raise capital. “They're thinking they need extra capital and that has implications going forward,” he said.

Howard Kunreuther, Cecilia Yen Koo professor of decision sciences and public policy and co-director of the Center for Risk Management and Decision Processes at the University of Pennsylvania's Wharton School, said insurers need to engage in longer-term thinking in order to heal.

“One challenging area,” Mr. Kunreuther said, “is how do you move away from myopia and thinking (only) about the next quarter?”