A Bermuda-based insurance brokerage executive has warned the industry to brace itself for a severe bolstering of regulation in the wake of the ongoing financial crisis.

Dennis Mahoney, chairman of Aon Global, told an insurance conference in Sydney, Australia: "If you thought Sarbanes-Oxley was bad, wait till you see what the regulators have in store for insurers."

Sarbanes-Oxley was the name given to US legislation to tighten up corporate accounting in the wake of the Enron debacle.

According to a report in The Australian newspaper, Mr. Mahoney believes that the full extent of the damage caused by the crisis to insurers' investment portfolios has yet to come to light.

"The insurance industry has stood up very well in comparison with, say, the banking industry but clearly there is more bad news to come out," he said.

"All insurers have suffered depletion on the asset side and clearly that's going to be increasingly regulated. The crowd wants to see an execution."

During the next six months "we can expect to see a wave of mergers and acquisitions" among insurers seeking to rebuild the capital side of their businesses, most of which is held in shares and fixed interest deposits. He suggested that premiums might have to rise.

Briton Mr. Mahoney said regulation would "almost certainly" swing further than it needed to.

"What you may find in the UK, for instance, is that they will put a super regulator above the Bank of England, the Financial Services Authority and the Treasury." Those three organisations had deliberately been set up to be separate.

He added that while the banking industry had Basel II, the insurance industry had a new set of European Union rules called Solvency II. "And it doesn't look as though Basel II was much help to the banks," Mr. Mahoney said.

He predicted the next wave of legal actions would be aimed at the ratings agencies, which had awarded higher ratings to monoline (bond) insurers than they deserved.