General insurance brokers are unlikely to be hit by a clampdown on conflicted remuneration proposed by the Hayne royal commission, according to retiring AUB Group CEO Mark Searles.

Broker commissions should not be conflated with conflicted payments, where a provider is incentivised to select one product over another, and the policy debate is likely to shift to reflect the difference, he says.

“The way the remuneration works in commercial lines insurance is transparent, it works well, it has been looked at many times over and effectively it does not fall into this area of conflicted remuneration,” Mr Searles told insuranceNEWS.com.au after the group delivered its half-year results today.

The Hayne royal commission says an inquiry in three years should include an examination of the general insurance exemption from the ban on conflicted remuneration.

Mr Searles says AUB supports Hayne recommendations that improve outcomes for customers, including the move to bring claims handling within the financial service definition.

AUB’s first-half net profit fell 16.5% to $19.8 million, while revenue grew 12% to $145.4 million.

Adjusted profit gained 1.8% to $17.014 million, excluding items such as adjustments to the carrying value of associates.

Mr Searles says strong revenue and profit growth was achieved in Australian and New Zealand broking operations and in the Sura underwriting agency business, while the risk services division was affected by changes in NSW workers’ compensation.

The company expects to see average rate increases of about 5% for this financial year and next year as the market cycle strengthens.

Mr Searles says historically there is an eight-year period from market lows to highs, but recent natural catastrophes and large weather events “may help push the cycle into a longer upswing”.

The strengthening rate environment is likely to increase acquisition opportunities and drive more consolidation as businesses owners and independents in the market shift gears.

“It allows people to raise their head above the parapet somewhat and start to think about opportunities out there, and that is exactly what we are seeing,” Mr Searles said.

The earnings result includes $1.6 million of costs related to an Austbrokers Canberra fraud case, which is now part of a police investigation.

“We have to respect the due process that goes with that and we will look to bring this to closure as quickly as possible,” Mr Searles said.

The company has ensured there are no wider issues across the network, he says.