SINGAPORE'S regulatory environment is the top issue that the local insurance industry is anxious about, said a survey that charts the top risks in the global insurance sector.

The Centre for the Study of Financial Innovation or CSFI, together with PwC, released the "Insurance Banana Skins 2015" survey, conducted in March and April.

The survey found local respondents to be worried about not keeping in pace with the regulatory developments across Asia, particularly at a time when profits have thinned due to excess capacity in the market. Singapore's response highlighted both country-specific risks and high-ranking global concerns. The source of most anxiety was regulation.

In particular, one participant said Singapore's regulations are the most onerous and warned that over-regulation could "strangle perfectly good and sound insurers from conducting good and sound business".

Overall, Singapore scored below average on the 2015 Banana Skins Index, implying a lower level of risk anxiety, while the global level is at a record high.

The lack of experienced talent came in as the second most worrisome risk.

Higher mobility and increased competition for talent has made it hard to attract and retain people. A participant said this is "leading to an overall reduction in the quality of underwriting and protection both at the direct and reinsurance level".

Billy Bennett, PwC Singapore's insurance leader said: "While financial services as a sector faces a war for talent globally, the situation has become more acute in the insurance sector in Singapore. Now more than ever, how insurance companies challenge, develop and motivate staff, as well as attract new talent and fend off the banking sector is critical."

The other concerns of local players are - natural catastrophes, cyber risk and change management, respectively.

Globally, regulations emerged as the top risk for the third time running.

The report said new rules governing solvency and market conduct could swamp the industry with costs and compliance problems. It could also distract management from the task of running healthy businesses at a time when the industry faces radical structural change.

Said Antony Eldridge, financial services leader at PwC Singapore: "The latest wave of regulatory change is not only creating huge operational disruption, but is also calling into question longstanding strategic certainties. Costs, prices and returns could soon become unsustainable if the changes aren't managed effectively."

Of particular interest is the European Union's Solvency 2 directive to be introduced next year.

Other areas that pose as risks to the global players include macro-economy, low interest rates, cyber risk and investment performance.

The study polled over 800 insurance practitioners and industry observers in 54 countries to find out which areas they believe to be the greatest risks in the next two to three years. Of these, 22 respondents were from Singapore.