A ‘tidal wave’ of reforms stemming from the Hayne royal commission will bring significant changes to the industry, according to a leading insurance lawyer.

Barry.Nilsson insurance principal Simon Black says plans to remove the exemption for claims handling from the financial services definition and to apply unfair contract terms provisions to insurance contracts are among the major changes in store for insurers.

“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, the law firm’s Sydney-based Principal of Insurance and Litigation, told insuranceNEWS.com.au.

“But because of the scope of the royal commission, the insurance industry unfortunately has come in 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 last 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. 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.”