Consumer groups are calling for an end to carve-outs that have meant insurance is excluded from laws on other financial businesses, in the wake of allegations of widespread misconduct at the Royal Commission which is conducting an inquiry into the financial sector.

The issue is expected to be tackled this Friday, when barristers assisting the commission outline a series of policy questions raised by the hearings, which uncovered misconduct across life and general insurance. The commission's interim report is due to be handed to the government on Sunday, reports The Sydney Morning Herald.

Among consumer groups, there is a renewed push for extending unfair contract laws into insurance -- which the government was already planning, despite the industry's opposition.

"Their exemption from the unfair contract terms laws that apply to every other industry has clearly been a disaster," said Ms Susan Quinn, a senior policy officer at the Consumer Action Law Centre.

"There's no onus on insurers to make sure their policies are fair, balanced and understandable. And we've seen that means people are shocked when their claims are declined or they're put through the wringer."

Insurance Council of Australia spokesman Campbell Fuller said extending unfair contract laws would require every insurance contract to be re-written, and the plan promoted by consumer groups would be "detrimental" for customers.

"The general insurance industry and the Insurance Council will continue to work with Treasury, regulators, consumer groups and other stakeholders on ways to improve consumer outcomes in practical ways," Mr Fuller said.

In response, insurers are warning that subjecting the sector to the laws would push up premiums, or force insurers to stop providing cover in higher risk areas - such as those that are prone to natural disasters such as North Queensland.

Another key policy issue that may be raised this week concerns claims-handling, which is currently excluded from financial services laws. Ms Kelly said one of the most frequent concerns raised by consumers relate to insurance claims handling.

"We think we really need to see more regulation, more fines, more sticks in claims handling, to improve the culture," Ms Kelly said.

Ms Quinn said the fact claims handling was self-regulated "sends chills down the spine," and using the law to improve outcomes in this area was a "no-brainer".