The dust is still settling after the Hayne royal commission’s final report swept over the financial services industry, but now that everyone has had a chance to stand back and consider the results, the consensus is that few of the findings were unexpected.

The royal commission has raised the bar for conduct expectations, and its final report and recommended reforms will have wide-ranging implications for insurers, brokers and regulators.

But as for industry-shattering shocks in the final document – despite the dramas at the hearings – possible areas for action were flagged in the interim report and policy question papers.

Plenty of details and impacts are still to be worked through as the proposals are put into effect, with some recommendations directly targeting general insurance, while a number of financial services reforms will also affect underwriters and intermediaries.

Deloitte says in an analysis that “Hayne’s final report is not ‘shock and awe’, neither is it a heavy policy tome”.

“What it does is send clear signals to reorient the system towards the consumer; to do the right thing; and ensure the rules are clear, followed and enforced.”

The 76 recommendations cover banking, financial advice, superannuation, insurance (general and life); culture, governance, and remuneration and the regulators.

Below is a summary of the recommendations affecting general insurance:

Broker commissions: Measures to improve financial advice will be examined in a review in three years. This review will also decide if conflicted remuneration ban exemptions are still justified for general insurance products, credit insurance products and non-monetary benefits. The review should ideally by completed by June 30 2022, and no later than December 31 that year. That gives those affected – specifically insurance brokers – three years to prepare for the worst, or at least develop a persuasive case for retention.

Unfair contract terms: These should be extended to insurance and the Australian Securities and Investments Commission (ASIC) Act amended to define “what is being insured” as the main subject matter of a contract. The duty of utmost good faith in the Insurance Contracts Act should operate independently.

Claims handling exemption: The handling and settlement of claims should be included in the financial service definition, meaning Corporations Act obligations to provide services efficiently, honestly and fairly would apply and ASIC would have greater regulatory oversight.

Disclosure duty: The Insurance Contracts Act should be amended to replace the consumer duty of disclosure with a duty to take reasonable care not to make a misrepresentation. Commissioner Kenneth Hayne notes the insurers know better than consumers what is considered relevant.

Code of Practice: The Insurance Council of Australia (ICA) should amend section 13.11 to empower the Code Governance Committee to impose sanctions for a code breach. Commissioner Hayne rejects the idea that sanctions should be imposed only if an insurer has failed to correct a breach. Industry codes in general should make some provisions enforceable by law, with ASIC responsible for approving areas nominated for potential court enforcement. In the case of ICA, it should also take all necessary steps by June 30 2021 to have the provisions that govern the terms of a contract with policyholders designated as enforceable code provisions.

Co-operation with the Australian Financial Complaints Authority: AFCA has replaced the Financial Ombudsman Service, and financial services companies should take reasonable steps to co-operate with the authority, particularly including making available all relevant documents and records relating to disputes. Commissioner Hayne says there are problematic dealings between insurers and the external dispute resolution body, and “there is little benefit in mandating the existence of systems if there is no obligation to comply with those systems”.

Add-on insurance: A Treasury-led working group should develop an industry-wide deferred sales model for add-on insurance products and this should be introduced as soon as possible. ASIC should impose a cap on commissions paid to vehicle dealers.

BEAR: The Banking Executive Accountability Regime should be extended to all Australian Prudential Regulation Authority-regulated insurers. Commissioner Hayne suggests it could first be extended to superannuation and then, “after a further interval”, the insurance sector. It would be jointly administered by ASIC and the prudential regulator.

No hawking: Hawking of insurance products should be prohibited. This recommendation is based on studies in which life insurance was sold over the phone to consumers who did not understand what they were purchasing.

Changing culture and governance: All financial services entities should, as often as reasonably possible, take proper steps to assess the culture and governance, identify and problems, deal with them and determine whether changes have been effective.

ASIC enforcement: ASIC should take as its starting point whether a court should determine breach consequences. Infringement notices should mainly be used for administrative failings, and will rarely be an appropriate enforcement tool for large corporations. The relevance and importance of deterrence should be considered in deciding whether to accept an enforceable undertaking.

A regulator for the regulators: A new oversight authority would monitor ASIC and the Australian Prudential Regulation Authority. It would comprise three part-time members, be staffed by a permanent secretariat and report to relevant ministers biennially.

Individual registration: Commissioner Hayne says individual financial advisers should be registered with a new disciplinary body that would complement ASIC’s compliance role. The National Insurance Brokers Association is clarifying whether the proposal would extend to insurance brokers.

As far as the royal commission’s recommendations for general insurance go, there are a number of points that will cause considerable angst. This is particularly the case for broker remuneration. But this issue, like most of the recommendations, shouldn’t have come as a surprise to anyone.

Both major political parties have accepted the recommendations – albeit with varying degrees of enthusiasm. So changes along the lines proposed by the royal commission are more than likely to result in legislative changes and new levels of regulatory oversight.

There is always a danger that a future government could add controls to those envisioned by the royal commission, and industry lobbyists will also need to stay alert to ensure general insurance is not affected by clumsy “catch-all” draughting.

The industry has already dealt with such issues as add-on insurance, although there may be a need for further tinkering in the future – but overall the Hayne recommendations are about adjusting rather than revolutionary change.