"Nevertheless, one would expect to see sales costs moving in tandem with premium growth trends, so the more logical conclusion is that the new commission payment legislation has resulted in slowing commission expenses for the industry," he said.

The impact of slowing premium income growth and continued strong outflows growth continued to pressure life insurance profits during the third quarter.

"This was the fourth consecutive quarter that profits have contracted and, in fact, the rate of contraction was the highest since the inception of the survey in 2003."

He said this was in line with the recent reporting season where profits across the sector either shrunk or headline losses were reported.

"There is no sign of relief just yet as far as bottom-line earnings go.

"Whilst investment income contraction trends are improving, this has not resulted in improved profits for the sector," he said.

To some extent, profits were under pressure due to a turnaround in risk business profitability, which contracted during the third quarter of 2009.

This followed four consecutive quarters of moderate to strong profit growth, and indicated that competitive pressures might be rising in this product segment, as a result of subdued economic growth.

"Life insurance confidence does not seem to be in line with the business fundamentals.

"Although there are moves in the right direction regarding investment income trends, the operational business does not appear as promising," Rutherford said.