The international insurance industry remains most concerned about over-regulation, according to the Centre for the Study of Financial Innovation’s (CSFI) biennial survey on threats.

The Insurance Banana Skins report – the fifth since 2007 – is produced by the London-based centre in association with PricewaterhouseCoopers (PWC).

“There is a widespread fear within the industry and among observers that the volume of regulation is swamping the industry,” CSFI director Andrew Hilton said.

“It costs too much, it takes up too much management time and it kills competition.”

However, Dr Hilton believes regulation’s continued status as the No.1 threat masks a bigger concern for the industry. A “cluster” of risks in the top five – the macroeconomy (No.2), interest rates (No.3) and investment performance (No.5) – suggests a damaging economic environment for insurers.

A new entrant to the top 10 banana skins is cyber risk, at No.4.

“The chief concern is the vast quantity of data held in the ‘cloud’,” Dr Hilton said. “Major breaches are inevitable and will do both financial and reputational damage.”

The survey also reveals some positives. Quality of management, the No.8 concern in 2013, has dropped off the list this year, as has business practices, the No.4 concern two years ago.

“The insurance industry clearly feels it is significantly better prepared to handle the problems it faces than it was at the time of the last survey,” Dr Hilton said.

However, confidence in internal management is not without some reservation.

As PWC notes in the report, regulation is just one disruptive shift facing insurers amid a “perfect storm” that includes the impact of digital technology, changing customer expectations and competition from new entrants.

The challenges this presents are reflected in the fact that change management debuts in the top 10 banana skins at No.6.

“More than just new systems and processes, successful execution demands a clear sense of how culture, organisation and talent strategies will need to change and how this can be achieved,” PWC Global Insurance Leader Stephen O’Hearn said.