The FMA/Reserve Bank Conduct review of the life insurance industry effectively gave the sector a fail and had little positive to say about it.

A key theme is that insurance companies and advisers aren't interested in customer outcomes. Insurance is all about sales and commissions, they say.

Basically the regulators tarred all insurance advisers with one brush. This sort of scaremongering is unwarranted. Most advisers I know are trying to do the right thing for their clients.

One of the things that is really hard to reconcile with the report is life insurance is about protecting people and therefore very focussed on customer outcomes. To suggest companies are just flogging product and then forgetting about it doesn't add up.

The report acknowledges this as one of the positive things in it related to comments about how life companies managed claims - which it said they did well.

Surely that is a sign they are looking after customers. Despite what the mainstream media will tell you, most claims do get paid. And the quantum of payouts in a year, across the sector, runs to billions of dollars.

A couple of the key premises of the regulators' argument was that churn, especially after the clawback period has passed was a significant issue in the industry.

It seems incredibly fixated on this yet there isn't a lot of evidence to suggest there is customer harm.

The areas of poor customer outcomes wasn't product sold by advisers rather it was products like credit card insurance.

Likewise the regulators don't like commissions, although there appears a lack of empirical evidence that customers are being sold the wrong products. Yes there is a good argument that the way commissions are structured should change. Models used by the likes of Fidelity Life and Asteron where they pay lower upfronts and higher renewals are good and maybe they should be used more across the industry.

No doubt there will be changes but I reckon it's a good bet to say that life companies's distribution costs will stay the same (or won't fall). They will just find different ways of spending the money. 

It's a little like the decision to ban letting fees in the property management industry. People will find a way around these sorts of bans.

Slightly redeeming to all the comments made were some from FMA chief executive Rob Everett towards the end of an hour long press conference. 

He said the regulators didn't want to "demonise" life insurance (not sure whether that goal was achieved) and that life insurance "is best sold with some degree of advice".