Life insurance companies have been taken to task for being too slow to improve their culture and conduct by regulators, which appears set to lead to tougher regulation.
The Reserve Bank (RBNZ) and Financial Markets Authority (FMA) reviewed 16 companies and found they generally put profit before customers' interests.
After the review the companies were asked to show how they intended to improve their systems, behaviour and tackle issues such as sales incentives.
FMA chief executive Rob Everett said many of the companies had done little work.
"While we are disappointed, we are not surprised.
"It is clear that progress has been slow and not as far-reaching as required. Some providers have started work to identify the customer and conduct issues they face, others have not provided any detail on this," Mr Everett said.
Of those that did respond, they identified 75,000 issues that needed fixing, including overcharging of premiums, underpaying of benefits, and unfairly declined claims.
Not all of the companies had removed sales incentives for front-line staff, as requested by the regulators.
The FMA and RBNZ said the life insurance industry's weak appetite for change, proved they needed tougher regulation.
"Deficiencies in some of the plans received, and some insurers' lack of commitment to implementing the regulators' recommendations, further demonstrates the need for additional obligations to be included in the regulation of conduct of life insurers," Mr Everett said.
Regulators cannot at the moment force insurers to comply with its recommendations.
The Financial Services Council, which represents the industry, accepted that companies need to do better, faster.
"It is clear that as a sector we need to do more and do it faster to improve identified issues especially in relation to legacy products, customer communications, and product design," Council chief executive Richard Klipin said.
"Conduct, culture and ensuring great consumer outcomes is paramount. Improvements across the sector remain a work in progress and this latest review from the FMA and RBNZ demonstrates that.
"Individual members will now work through their specific issues raised by the FMA and respond appropriately with steps to rectify them," Mr Klipin said.