The head of a financial adviser industry body has hit back at a report claiming some advisers are shifting clients between insurers to make higher commissions and get travel perks.

The Financial Markets Authority has today released its analysis of sales data from New Zealand's 12 main life insurance companies in a bid to better understand the level of replacement insurance being sold in the New Zealand market.

The report found some advisers are likely to be acting in their own interests by replacing insurance policies to boost commissions or get free overseas trips and the FMA will now look closely at 200 advisers with high levels of replacement business.

But Rod Severn, chief executive of the Professional Advisers Association, said the report had failed to provide specific evidence that advisers were putting themselves ahead of clients.

"The adviser that went on 10 trips over four years - might want to question his ethics but having said that he may have legitimately earned those trips.

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"Without actual proof that he moved clients to a different insurer to benefit himself it hard to say what is good, false or indifferent."

Severn said the report had also left out a large part of the industry as the sales practices of advisers who work for banks and insurance companies were not included in the report.

"They have missed a major chunk of the industry.

He said many consumers went to their bank expecting to get quality advice and were told to buy the bank's life insurance policy because they were taking out a mortgage.

The FMA report said it had decided to focus on authorised financial advisers and registered financial advisers because there was a higher risk of churn in that group.

"This is because they generally sell more than one brand of life insurance.

"Other types of advisers could still be mis-selling but because they only sell one brand, they are unlikely to be churning policies.

Churn occurs when an adviser recommends switching to a different insurer to benefit themselves rather than the consumer.

The move can leave consumers exposed as they may not be covered for pre-existing conditions under the new policy and may miss out when they come to make an insurance claim.

There are also concerns that high churn levels maybe driving up the cost of life insurance in a market which is struggling to attract new customers.

The FMA report found that of the 3700 advisers that had at least one active life insurance policy, 1100 had a least 100 policies on their books and of those 200 had a high estimated rate of replacement business.

Those 200 advisers had 65,000 active policies between them, involving about $110m in annual premiums and earned 50 per cent more from commissions than other high volume advisers.

The market is worth around $1.7 billion in premiums annually.

The report found there was a "strong link" between types of commissions, the end of a clawback period - where an adviser must repay a portion of their commission if the policy is cancelled - and the likelihood of a policy being replaced.

"Policies with a high upfront commission were more likely to be replaced once the clawback period ended," the report noted.

Insurance firms can pay up to 200 per cent of the first year's premium up front to advisers who switch a customer to them.

It found the quality of a policy was only a "minor factor" in whether a policy was replaced.

What you need to know before switching your life insurance:

It also found that overseas trips appeared to be an effective sales incentive with policies that were no longer subject to clawback more than twice as likely to be replaced if overseas trips were offered as an incentive.

During the four years it reviewed advisers were offered trips to Shanghai, Prague, Las Vegas, Hollywood, Rome, New York and Rio de Janeiro as sales incentives by life insurers.

The high-replacement advisers took an average two of these trips each and one high-replacement adviser took 10 trips in four years.

Some advisers were also found to have earned significant incomes from life insurance commissions.

The report stated that around 150 advisers earned at least $200k in 2014 and around 70 advisers earned at least 300k in commissions.

Liam Mason, director of regulation at the Financial Markets Authority, said the majority of advisers did not have high levels of replacement business regardless of how they were paid.

This suggests that some advisers are acting in their own interest, rather than in consumers' best interests.

"However, there is a clear link between high rates of replacement business in certain areas and high up-front commissions, or incentives for high sales volumes, such as overseas trips laid on by providers."

Mason said the FMA would now take a closer look at the conduct of the advisers with the highest levels of replacement business.

"We will be examining the basis on which policies have been switched or replaced and the drivers for that activity - with a particular reference to incentives (of whatever form) provided by insurance providers."

If an adviser was found to have breached their duty of care they may be prosecuted under the Financial Advisers Act.

Mason said this could involve the regulator directing the adviser to make changes or if the adviser is an authorised financial adviser they could face the financial advisers disciplinary committee if they have breached the code of conduct.

Mason said consumers who were concerned they had been switched without good reason should ask their adviser to explain how the move was an advantage to them rather than the adviser.

If they were not satisfied they could also go to the adviser's dispute resolution scheme and make a complaint with the FMA.

While other countries have cracked down on commissions Mason said its preference was to focus on the conduct obligations of advisers and use those to encourage advisers to act appropriately.

Read the FMA's full insurance report below: