Insurance Council of Australia (ICA) CEO Rob Whelan has warned against rushing to implement Hayne royal commission proposals as the industry faces pressure to respond more quickly to consumer issues.

Mr Whelan says the price of getting reforms wrong is high, and calls for legislative changes to be accompanied by regulatory impact statements.

“A process by which regulation is introduced in a progressive fashion, taking account of industry and market impacts, would reduce implementation risk and ensure more sustainable outcomes,” he told the ICA Annual Forum last week.

“If I have one piece of advice for all concerned, it is to hasten slowly lest we repent at our leisure.”

Mr Whelan says the royal commission and other regulatory reforms will put the industry under pressure as it seeks to maintain affordable pricing. The status of the code of practice will also become more complex and move from a voluntary to mandatory document under royal commission recommendations.

“There will be elements that will be subject to black-letter law enforcement and others that will be more akin to a statement of ethical principles,” he said.

“Again, a balance needs to be struck here between the legal enforceability of code provisions and the living document we have today that responds to changing community needs.”

Australian Prudential Regulation Authority (APRA) Deputy Chairman John Lonsdale told the forum insurers should not wait to be “dragged into action” when concerns are raised about products or services.

He says in areas including add-on insurance, unfair contract terms, conflicted commissions and questionable sales practices, insurers have left themselves vulnerable by failing to mitigate against well-known risks.

“The industry’s reluctance to address fully the problems such as add-on insurance means some issues have been taken out of insurers’ hands,” he told the forum.

The Australian Securities and Investments Commission has also called for a more proactive attitude.

“We encourage the insurance industry to make the changes now to improve consumer outcomes and not wait for legislative changes to drive a minimalist legal compliance approach,” Commissioner Sean Hughes told the forum. “None of us can stand back and wait for another inquiry or royal commission for answers to issues we can resolve ourselves.”

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