The Insurance Council of Australia (ICA) will prepare a comprehensive paper on the need for a modern and efficient regulatory system in the wake of a plethora of reforms, as it prepares for a potential financial system inquiry.

CEO Andrew Hall pointed out at the National Insurance Brokers Association (NIBA) convention in Adelaide last week that the industry was dealing with an increasingly convoluted array of regulation following changes sparked by the Hayne royal commission.

“We have to ask ourselves, does Australia have a modern and efficient regulatory system governing these arrangements,” he said.

Mr Hall says financial system reviews are regulatory conducted by governments and it has been eight years since the Murray inquiry. ICA will develop its paper later this year, ahead of any announcement of another review.

“We want to get ahead of that game,” Mr Hall said. “We have spent enough time looking back, we have got to start looking forward and working out what does the future of general insurance look like in this country and we want to lead on that debate.”

In a panel session at the NIBA convention, industry consultant John Trowbridge said that transparent disclosure of commissions, fees and charges is critical to trust and confidence in the industry and in averting heavy-handed government action

Mr Trowbridge says the lack of visibility around general insurance remuneration has been a problem and will come under scrutiny as part of a Federal Government review of financial advice that will be completed this year.

“With the Quality of Advice review coming up, if the insurance industry, and in particular the broking industry, doesn’t deal with that, then I think you are at risk of the Government forcing the issue in some way,” he said.

NIBA plans to launch its revised code of practice, which includes tougher measures around disclosure remuneration and conflicts of interest, on March 1.

CEO Phil Kewin says the code will ban preferential remuneration, such as volume-based commissions, and contingent remuneration, unless under a binder arrangement. The strengthened document includes increased disclosure requirements, obligations to report brokers who breach the code and commitments to identify and support vulnerable clients.

NIBA expects the new code will be implemented from November 1, ahead of the expected December 16 delivery of the Government’s advice and broker remuneration review.

“It is really important we have a new code in effect, and everyone up and running, before that date,” Mr Kewin said.