Australian life insurers will face increased pressure to change their business models amid fallout from the Hayne royal commission, KPMG says.

“Sustainable growth going forward will only be achieved through customer-centric business models, given the public trust debate across the financial services sector that has been amplified through the royal commission,” Actuarial and Financial Risk Partner Hoa Bui says in an industry insights report.

“We can expect increased regulatory pressure for life insurers to demonstrate that their products demonstrate true customer value and a transparent customer experience through the full service life cycle.

“Compliance and remediation costs will increase in the shorter term, and companies will be expected to adapt their compliance operating models to manage costs effectively.”

KPMG says the industry grew gross policy revenue by 6.3% to $24.7 billion in the year to March, and net profit after tax increased by $627 million to almost $1.31 billion.

Innovation and efficiency are expected to accelerate, driven by foreign players that have bought local life insurers. Foreign-controlled companies held about 47.8% market share last year, up from 41.4% the previous year.