Of particular concern to insurers is "conduct regulation," an emerging concept that calls on insurers to improve their behavior by aligning corporate and product governance, incentives, market conduct and ethical codes, among other measures, with the their mission and values.

"Conduct of business regulation is causing growing alarm among insurance companies," said Kevelighan. "It's still not a well-defined concept that the U.S. Financial Stability Oversight Council and regulators in the G20 countries are embracing."

Global hot spots

Turning to politics, Kevelighan flagged a number of issues the next American president will have to tackle come 2017. Among them: China as a growing military power, regional tensions in the developing countries, and the rise of the far right in the U.S. and Europe.

In respect to the last, he doesn't foresee extremists in the Democratic or Republican parties taking power. What can be expected is more legislative gridlock, as the two parties battle over such contentious issues as immigration, tax reform and free trade. Relations on Capitol Hill could be especially contentious, he noted, if Clinton wins the White House and the GOP retains control of one or both houses of Congress.

Related: Trump presidency a threat to world economy, says risk report

In this political environment, social media could become a more prominent "bully pulpit" of lawmakers and political operatives seeking to elicit public support for policy positions. The "alternative Twitterverse" has gained notoriety during the presidential campaign, he noted, thanks in no small part to Trump's extensive use of the social network, his frequent missives landing "body blows" against political opponents.

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The outcome of the November elections will likely have limited bearing on the industry's "return on equity" or profitability, said I.I.I. vice president James Lynch. (Photo: Thinkstock)

If past experience is any guide, said Lynch, the outcome of the November elections will have limited bearing on the industry's "return on equity" or profitability. Reviewing the historical record since 1950, he noted that ROE has for property and casualty carriers varied little on average during Democratic or Republican administrations: 7.72 percent versus 7.85 percent, respectively.

Industry return on equity hit its peak under the Carter administration, attaining 16.43 percent; the second highest ROE was under the Reagan administration (15.10 percent). ROE since President Truman assumed the White House in 1945 has ranged between 3.55 and 8.93 percent.

State's impact on revenue and profitability

A more important driver of industry revenue and profitability, said Lynch, is politics out in the hinterland, as insurance regulation is primarily a state function. On this level, the picture is decidedly mixed: Only about a half-dozen states, according to a December 2015 R Street Insurance Regulation Report Card, received a grade of A- or higher in terms of industry-friendly regulation. Those receiving a "B" predominate in the Midwest, West and Southwest.

Among those receiving "D" marks: California, Montana, Texas, Louisiana, Mississippi, Florida and (not surprisingly, given its leadership role in state regulation) New York. One state in the report card received an "F" — North Carolina.

Of the 50 states, said Lynch, Republicans currently control both chambers of 30 state legislatures and the Democrats 11. "Split legislatures" (each party controlling one chamber) prevail elsewhere. This balance of power is likely to remain after the November elections, regardless of a Clinton or Trump victory.

"Republicans control most states, and it's likely to remain that way," said Lynch. "But 20 chambers could switch, mainly in states with split legislatures." These include Arizona, Colorado, Iowa, Kentucky, Maine, Minnesota and Washington.

11 state insurance commissioners are vying for reelection

In the 12 states where governors are up for reelection this year, he added, 8 Democrats will be defending their seats. Races will be particularly tight in Indiana, New Hampshire, North Carolina, Vermont and West Virginia. Eleven state insurance commissioners (5 Democrats and 6 Republicans) are also vying for reelection.

Turning to ballot initiatives, Lynch noted that 9 states will have referendums proposing legalization of marijuana. Arkansas has two: One would let patients grow their own cannabis.

Lynch expressed concern that, should the state ballot initiatives pass, insurers could be facing a rise in worker compensation claims as more employees "come to work high." A rise in claims could also negatively impact life and P&C insurers, given the prospect of more marijuana-related accidents and deaths on the nation's highways.

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Some 54 mergers among U.S. insurers in 2016 are now completed or pending, according to I.I.I.'s Kevelighan. (Photo: Thinkstock)

Between the first quarters of 2014 and 2016, he noted, the cost of accidents rose "dramatically," boosting insurers' costs from losses. Among auto insurers, the breakdown, as measured by Fast Track Monitoring System, included the following increase in loss costs:

• Bodily injury: 9.6 percent;

• Property damage: 14.7 percent;

• Personal injury protectionL 18.4 percent;

• Collision: 11.1 percent; and

• Comprehensive: 11.0 percent.

"Compare these increases with the rise in consumer prices overall, which edged up just 1.7 percent between 2014 and 2016," said Lynch.

Turning to opioids — natural and synthetic drugs most often used to medically to relieve pain and that have morphine-like effects — he noted the U.S. is experiencing a "nationwide epidemic." That's resulted in a 25 percent increase insurance claims tied to the drugs. Some 13 states now limit the use of worker compensation insurance for covering prescriptions opioids.

Peering into the crystal ball

What will be top-of-mind for in the industry in 2017? In addition to worker comp regulation, Kevelighan identified several topics, including autonomous (self-driving) vehicles, peer-to-peer insurance, cybersecurity, the "sharing economy," politics and (in respect to reinsurers) overcapitalization.

Kevelighan voiced confidence that insurers will be able to absorb U.S.-insured catastrophic losses without unduly impacting their balance sheets. In 2015, these losses (from hurricanes and the like) totaled $15.2 billion, down from $15.5 billion in 2014.

To better absorb such losses, he added, the industry will further consolidate. Some 54 mergers of U.S. insurers in 2016 are now completed or pending. This compares with a 564 deals concluded in 2015 valued at $194 billion, a whopping 517 percent increase over the $38 billion in transactions (506 M&A deals) completed in 2014.

"Last year's M&A transactions were just staggering," said Kevelighan. "These deals will likely continue. We'll just have to sit back and see how the industry will shakeout as a result of all the activity."

Related: Agency mergers and acquisitions continue to be strong for first-half 2016