Speaking at the Life Brokers Association (LBA) conference in Wellington, Neilson said that the ISI was not working towards a ban on commission.

However he said in the wake of the commission ban in Australia greater consumer and political pressure will be brought to bear, particularly on upfront commissions.

He said that pressure would result in a move towards trail commissions over upfront commission payments to advisers.

While he acknowledged that the situation in Australia differs from New Zealand, Neilsen said commission is "an issue we have to address" and that the ISI was looking at the matter.

He said part of the examination would be around possible conflicts of interest that can arise between policy sellers and holders when large upfront commissions are involved.

His comments on commission prompted a response from advisers in the audience, with TNP managing director Jeff Page arguing "not one widow in New Zealand would say her husband paid too much commission."

Audience members also raised the issue of client reluctance to pay upfront fees as an obstacle to alternatives to commission.

Neilson also said the ISI was widening the sample for its survey on underinsurance saying it intended to exam issues around two groups; those who cannot afford insurance and those who can afford cover but may be unaware they are inadequately covered.

He said the purpose of the survey was to be able to present Government with solutions, something he advocated industry and professional bodies become more proactive on.

As a former politician he was aware Government's often felt the need to be "seen to be doing something" and he wanted bodies such as the LBA to play a more constructive role in offering solutions to issues such as underinsurance.

"The industry needs a solution before most people realise there's a problem," he said.