Consumer confidence in the life insurance industry has dropped in recent months, according to Reinsurance Group of America MD Pauline Blight-Johnston.

“Underinsurance is increasing and confidence [in the sector] has dropped off,” she told the Financial Services Council (FSC) conference last week.

“In the worst part of the global financial crisis sales were strong, but in the past six months we have seen sales pulling back.”

Ms Blight-Johnston was speaking at the launch of the PricewaterhouseCoopers CEO Report on the issues facing the financial services industry.

She says the underinsurance problem is the fourth-highest concern of the 31 CEOs surveyed.

The report says the “chronic levels of underinsurance”, plus major regulatory reform and pressure to obtain reasonable returns on investments have left life insurance CEOs struggling.

Other issues of concern raised by the CEOs are improved industry efficiency, including portability of products in superannuation accounts, and streamlining the underwriting process.

The CEOs also want standardised product terms and definitions to boost consumer knowledge of their cover.

Ms Blight-Johnston says the industry is also “very bad at selling the good news” about life insurance to consumers.

“Life insurers allow themselves to get beaten up and they are not very good at selling the good story to the public,” she said.

FSC CEO John Brogden says there is a public perception financial advisers are not to be trusted.

“Financial advisers are like politicians,” he said. “Everybody hates them, except they like their own member or adviser.”

Mr Brogden says the Financial Planning Association has done a good job promoting the professionalism of advisers, but the industry needs to change its approach and stop internally focused criticism.

“We flagellate ourselves too much,” he said.