The report said that the sector’s slow adaptation to “new technologies and changing consumer preferences towards online product distribution” has meant it relies largely on the traditional adviser sales channel, where life insurers pay high commissions to advisers.
New Zealand-based life insurers paid around 20% commission of its gross premium revenue to insurance advisers.
It sits top of the list for most commission paid ahead of Mexico (13%) and Hungary (12%), which made up the top three.
Insurance advisers have an important role in helping buyers select insurance products that meet their needs.
But the report said that the high level of commissions and other incentives that life insurers pay to advisers can create “conduct risk”.
The report said: “In some cases, advisers could be incentivised to encourage policyholders to switch to different insurance policies even if the changes do not benefit the policyholders.
“Such activities can compromise the efficiency of the sector, because policyholders may not be matched with the best policies, and ultimately end up funding high commissions through high premiums.”