Damage to the general insurance industry’s reputation inflicted by the Hayne royal commission will not be undone overnight, according to S&P Global Ratings.

The ratings agency says in a new report that it views the reputation of property and casualty (P&C) insurers as “tarnished” following revelations in hearings last month.

Credit Analyst Craig Bennett says this extends beyond the four companies that appeared before Commissioner Kenneth Hayne – Allianz, IAG, Suncorp and Youi.

“Companies we have met are taking on board some of the commission’s early findings,” he told insuranceNEWS.com.au.

He says it is impossible to put a timeframe on repairing the industry’s reputation.

“Some of the revelations were unexpected,” he said. “[The reputation] is something that will be rebuilt over time.”

S&P says while the royal commission’s final findings are not yet known, they will likely result in “a range of actions” including changes to products, processes and procedures.

“Measures will also likely strengthen company and industry controls, and consequently raise operating costs.”

Despite the royal commission’s impact, S&P expects the industry to continue its recovery and record “solid” earnings this year and next, reflecting recent rate hardening across many lines.

“The underlying strength is there in terms of profitability,” Mr Bennett told insuranceNEWS.com.au. “But it is driven by rate and not volume.”

S&P predicts moderate rate rises in motor and home and contents, with “selective” hardening in commercial lines.

“We anticipate P&C insurers will use some of the strong returns from personal lines to enhance operational efficiencies, defend market positions and refine risk-based pricing capabilities,” Mr Bennett said.

“Headwinds include slower volume growth, claims inflation and, more recently, inquiries forming part of the royal commission.

“On balance, we maintain our stable outlook for the sector.”