Deep inside last week's financial service industry's report entitled Towards Prosperity was a section on the life insurance industry which seems as far from the prosperous title as you can get.

Instead of growing, the report notes that life insurance policy numbers have been static since 2013 despite New Zealand's rising population.

Premium revenue has only risen because of increases for those who already have life insurance and new sign-ups are not prepared to pay as much.

"Premium revenue from new customers has been lower than the reduction in premium income from lapsed and cancelled policies since around 2012.

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"This suggests that customers with new or terminating policies are more price sensitive than the shrinking core group of existing policyholders," the report notes.

But with an average increase of 8 per cent per year - well above inflation - even existing policyholders might find it hard to continue stomaching the costs.

The report notes that growth potential for the sector appears to be "modest".

That could be a major understatement as regulators turn their sights on stopping churn in the industry - where clients are moved between life insurers so that advisers can clip the ticket.

The Financial Markets Authority/Reserve Bank report on life insurance culture and conduct which is due to be released late January is also likely to weigh on the potential for the sector.