The Hayne royal commission has stopped short of calling for a ban on general insurance commissions, instead recommending a further review.

Commissioner Kenneth Hayne’s final report was published today, along with the Federal Government’s response.

Treasurer Josh Frydenberg pledged to act on all 76 of the report’s recommendations.

“My message to the financial sector is that misconduct must end and the interests of consumers must now come first,” he said.

“From today the sector must change, and change forever.”

There had been fears the report would call for all commissions to be banned – a move that general insurance brokers predicted could decimate the broking sector.

But instead it recommends a review of measures to improve the quality of advice, including consideration of general insurance commissions, to start in three years and be completed by December 2022.

The Government says it “agrees to review the remaining exemptions to the ban on conflicted remuneration”.

The report also calls for empowerment of the general insurance Code Governance Committee to “impose sanctions” on subscribers that breach the code.

It also recommends extending unfair contracts terms provisions to insurance contracts, which the Government has pledged to carry out.

The Government also agrees to remove the exemption for the handling and settlement of insurance claims from the definition of a financial service, to enable the Australian Securities and Investments Commission (ASIC) to have jurisdiction over claims.

Addressing each of the case studies considered during last year’s hearings, Commissioner Hayne refers Youi and Allianz to ASIC for potential further investigation and action.

For Youi, the matters relate to claims handling and its duty of utmost good faith, as examined in case studies following a Broken Hill hailstorm and after Cyclone Debbie.

Commissioner Hayne says the referrals are for ASIC to consider “what action it can and should take”.

The report is critical of Allianz for the time taken to correct misrepresentations on its website and for its breach reporting procedures at the time. It also refers compliance process issues to the Australian Prudential Regulation Authority.

The report notes that Suncorp’s issues related to the cash settlement of claims following bushfires in Victoria have already been drawn to ASIC’s attention.

Insurance Council of Australia (ICA) CEO Rob Whelan has welcomed Mr Frydenberg’s pledge to act on all recommendations.

“Australians have had every right to be disturbed and angered by reports of misconduct, and by case studies that have revealed the deep personal impact felt by consumers who have been poorly treated,” he said.

“ICA and its members pledge to do better and to continue to be held accountable.”

“Repairing public confidence in general insurance is essential if we are to continue to provide effective and efficient risk-based products to households, businesses, governments and the broader community.”

Noting that Commissioner Hayne has not identified any systemic issues relating to general insurance, Mr Whelan praised his avoidance of “a one-size-fits-all” approach. [He] has sensibly provided recommendations designed to address issues specific to each industry sector.

“ICA supports the aim of recommendations that directly relate to the general insurance industry and to the regulation of financial services.”

“Several recommendations, including those relating to add-on insurance and unfair contract terms, are already being addressed by the industry and ASIC.”

“ICA also supports removing the exemption of the handling and settlement of insurance claims from the definition of a financial service. It looks forward to further consultation on the design and implementation of this and other recommendations.”

“Royal commission recommendations will be taken into account in the final version of the revised General Insurance Code of Practice, which ICA will launch in several months.”

National Insurance Brokers Association CEO Dallas Booth told insuranceNEWS.com.au the commissioner’s “considered approach” is “pleasing”.

However, he says the commissions issue has not gone away.

“There is a short-term positive but there is still a medium to long-term focus on whether commissions remain appropriate.”

“The worry is still there.”