The Hayne royal commission has been likened to a “tidal wave” that struck the insurance industry, unleashing proposals that will impact on the industry in coming years, according to a leading insurance lawyer.

Barry.Nilsson Principal of Insurance and Litigation team Simon Black says the Federal Government’s vow to proceed with the recommendations means there is no turning back the clock for an industry that has for the most part relied on a self-governing code.

Plans to remove the claims handing exemption from the financial services definition and apply unfair contract terms provisions to insurance contracts are among the measures that could have profound effects, he told insuranceNEWS.com.au today.

“In some respects the insurance industry has been caught up in a sort of tidal wave which was really caused by misconduct in the banking sector,” Mr Black said.

“But because of the scope of the royal commission, the insurance industry unfortunately has come in a for a lot more attention than it would have anticipated.”

His warning echoes the views of Insurance Council of Australia CEO Rob Whelan, who said earlier this month the reforms will stretch the industry to its limits and create a “seismic shift “ in the way it operates.

Mr Black says the amount of attention Commissioner Kenneth Hayne paid to general insurance in his final report was surprising.

“In my view some of [the recommendations] are simply providing another layer of protection when there is already protection there, but certainly there is a potential for far-reaching impacts on the insurance industry.”

Cases of misconduct and poor behaviour heard during the royal commission hearings last year mean the pressure is on the Government to act and restore the public’s trust in the financial services sector.

Mr Black says the speed of Canberra’s response to the final report is a sign of things to come.

“Some of the horror headlines… meant that the royal commission really achieved a lot of momentum,” he told insuranceNEWS.com.au. “The high profile of the royal commission and the headlines relating largely to banks mean that it is going to be very difficult for the recommendations not to be followed through.”