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Reform pain: ICA chief says Hayne will ‘stretch’ industry

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The large number of reforms spilling out of the Hayne royal commission will stretch the general insurance industry to its limits and create a “seismic shift” in the way it operates, according to Insurance Council of Australia (ICA) CEO Rob Whelan.

Speaking at last night’s 10th anniversary Australian Insurance Law Association (AILA) Young Professionals Luminaries Dinner, Mr Whelan admitted the royal commission was more damaging than he’d expected.

When the inquiry was first proposed he “felt reasonably confident that general insurance would be either immune or at worst a sideshow”.

“I believed we would at worst sustain only collateral damage – after all, we had our highly regarded code,” he said.

“Regrettably I was only partly right. Legislators and regulators have instigated their solutions and they will stretch the industry to its limits.”

Mr Whelan lists planned reforms in product and distribution obligations, claims as a financial service, unfair contract terms, anti-hawking provisions, and sanctions and enforceability in codes.

“Any one of these initiatives in isolation would be a challenge to implement. The combined or aggregate effect of all these changes simultaneously is a whole different prospect."

Warning that “in protecting the interests of the few we must be cognisant of the impacts on the many”, Mr Whelan predicted dramatic changes for insurance.

“One thing is certain – the industry will be transformed over the next decade as these fundamental changes bring a seismic shift in how the industry operates.”

Mr Whelan says the best way to navigate the changes and ensure the intended outcomes are delivered is to embrace customer-centric principles.

“Placing the customer at the centre of decision-making is surely the approach that will resolve the false dichotomy of customer versus profit and redeem the industry in the eyes of its detractors and, most importantly, its customers.”