Your browser is not supported

Our website does not support the browser you are using. For a better browsing experience update to a compatible browser like the latest browsers from Chrome, Firefox and Safari.

Review of the Insurance Solvency Standards

We are reviewing the existing suite of insurance solvency standards, in part to address the new accounting standard for insurance contracts (NZ IFRS 17).

About the review

We are responsible for the prudential regulation of New Zealand’s insurance sector. We operate a solvency regime that sets minimum capital requirements for licensed insurers domiciled in New Zealand or in jurisdictions that don't have an equivalent regime.

We are reviewing the solvency standards alongside the Insurance (Prudential Supervision) Act 2010 (IPSA) — the primary legislation that empowers regulation and supervision. We started a review of the existing suite of insurance solvency standards in mid-2020, in part to address the new accounting standard for insurance contracts (NZ IFRS 17). The first stage of the review has led to the publication of the Interim Solvency Standard (ISS) and subsequent amendments to the ISS.

We will consult on a final solvency standard in the second stage of reviewing the solvency standards.

Review status

The ISS was amended in July by the Interim Solvency Standard Amendment Standard 2023 and applies to all non-exempt insurers according to their licence conditions.

We consulted on the second amendment of the ISS between 27 September and 8 November 2023. The second amendment will address remaining issues within the scope of the first stage of the solvency review – the structure of the solvency regime and handling of NZ IFRS 17.

Deferral of the issuance of the second amendment of the Interim Solvency Standard

We consulted on a second amendment of the Interim Solvency Standard (ISS) from 27 September to 8 November 2023. We received a lot of valuable feedback from stakeholders. As a result, further changes are now required to the amendment standard.

The solvency standard is important and complex. Because of this, we have made the decision to commission an external review. This will make sure that the changes we propose are robust and do not introduce any additional issues.

Following the external review, we plan to publish an exposure draft of the updated standard. There will be a brief consultation before publishing the final amendment standard. We had planned to issue the amendment standard to be effective from 1 June 2024. However, we expect this will delay the effective date of the second amendment by 6 to 9 months.

Guidance on solvency disclosures under the Interim Solvency Standard (ISS) 2023 issued on 8 November 2023 can be found further down the page.

The guidance indicates that insurers may quote solvency figures on the ISS as currently enacted, and on the ISS as it may be after the second amendment. Insurers must clearly state that the former is the statutory requirement and the latter is indicative. This guidance continues to apply until we issue the second amendment of the ISS or update the guidance.

Guidance on solvency disclosures under the Interim Solvency Standard (ISS) 2023


Issued on 8 November 2023, and valid until amended or withdrawn.


A proposed second amendment to the ISS may have material impacts on reported solvency figures for some insurers.  Some insurers may wish to provide supplementary solvency figures and explanations, in addition to mandatory solvency disclosures, in order to communicate anticipated impacts of the second amendment to the ISS.

This guidance is intended to assist insurers in ensuring any supplementary solvency figures and explanations are clear and not misleading. Compliance with this guidance is optional and nothing in this guidance overrides any legislative or regulatory requirements. This guidance is not legal advice, and we encourage insurers to seek their own professional advice.

Mandatory solvency disclosures

Solvency standards issued by us specify the solvency figures that are required to be disclosed by licensed insurers subject to each standard. The figures must be calculated in accordance with the version of the applicable standard(s) in effect as at the relevant reporting date.

Normally, solvency figures calculated on a different basis to the mandatory solvency disclosures should not be included as part of the solvency disclosure.  This is because reporting 2 sets of solvency figures on different bases is likely to create confusion over the regulatory solvency position of the insurer.

However, for some insurers the anticipated impacts of the proposed second amendment to the ISS may be sufficiently material that the solvency position being reported in the mandatory solvency disclosures is significantly different to the solvency position as if the second amendment of the ISS was already in effect.  That is, the mandatory solvency disclosures may not be a good guide to the future solvency position of some insurers if the second amendment comes into effect.

In light of this, we are comfortable for insurers to disclose, alongside the mandatory solvency disclosures, additional solvency figures calculated as if the second amendment to the ISS was already in effect, provided:

  • the mandatory solvency figures are clearly labelled as the regulatory solvency position required under the applicable version of the ISS or earlier solvency standard(s)
  • the additional solvency figures use the second amendment to the ISS, as issued (if it has been issued) or as proposed on our website (if not) – no other basis can be used
  • the additional solvency figures are for the latest as at date reported in the mandatory solvency disclosure, in other words are not a projection
  • the additional solvency figures are clearly labelled as incorporating the second amendment to the ISS, which is not yet finalised (if this is the case as at the reporting date)
  • there is a statement that the additional solvency figures do not represent the regulatory solvency position
  • the insurer’s Appointed Actuary has calculated or reviewed the additional solvency figures, and there is a statement to this effect, and
  • there is a link to the proposed or issued (as applicable) second amendment to the ISS on our website. 

Insurers are able to make commentary as part of solvency disclosures, as long as it is accurate and not misleading.

For some insurers the anticipated impacts of the proposed second amendment to the ISS may be sufficiently material that it may be reasonable for insurers to provide some explanation of the implications for the future solvency position.

Any such commentary should be clear:

  • that the second amendment to the ISS does not affect the regulatory solvency position unless and until it comes into effect
  • if the second amendment is not yet issued, that this is only a proposed amendment
  • if the second amendment is issued, that this is the case and state the effective date of the amendment
  • avoid technical jargon where possible
  • be relatively short (for example, no more than a few paragraphs), and
  • if figures are provided, they should be limited and follow the above guidance (“can solvency figures on a different basis be disclosed alongside the mandatory figures”).

Second amendment consultation paper - 27 September 2023

We have published a consultation paper with proposals to address parts of the ISS that need clarification or are not working as intended. The consultation paper also covers other minor issues which fall within the scope of stage 1 of the Review of the Solvency Standards. This scope relates to addressing NZ IFRS 17 and improving the structure of the solvency regime.

The most significant proposals relate to:

  • re-basing the underwriting risk capital charge to appropriately reflect pricing risks rather than NZ IFRS 17 accounting outcomes;
  • reinstating credit risk capital charges on interest-sensitive assets;
  • explicitly excluding reinsurance cash-flows related to future primary contracts from “insurance items” to allow their recognition in solvency capital as a non-insurance item;
  • clarifying that contract clauses allowing early cancellation should not establish a boundary; and
  • clarifying how to handle tax, acquisition expenses and risk adjustments in the “modified PAA” method.

As well as the consultation paper, we are publishing a draft of the Amendment Standard, a Consolidated Standard and a Guide to the Standard. We are looking for feedback on all of these documents. You can email any consultation questions to [email protected]

Consultation documents

Monitoring Insurer Solvency Bulletin

We have also published an article discussing solvency measures. The article explains the changes in solvency measures and guides you on how to interpret the changes.

Past consultation information

Amendment Standard issued

We identified a small number of minor errors in the Interim Solvency Standard 2023 (the Standard). We issued an ‘Amendment Standard’ to correct them. We also took the opportunity to ease sign-off requirements for solvency returns so you can specify signatories by the conditions of an insurer’s licence.

Stakeholders made us aware of a number of additional issues with the Standard, and we thank them for raising these. We intend to address these issues over the coming months by consulting on and issuing a further amendment. We will prioritise this work over stage 2 of the Solvency Review (the detailed review of methods and parameters). We will advise the schedule for work on this further amendment in due course.

References in conditions of licence to the ‘Interim Solvency Standard 2023’, from 1 August 2023, refer to the Standard as amended by the Amendment Standard.

Interim Solvency Standards released

In its 20 September 2022 meeting the Board of the Reserve Bank issued the Interim Solvency Standard 2023.  The standard is the culmination of more than two years of work and consultation and is designed to streamline solvency calculations and facilitate continued sound solvency management once NZ IFRS 17 (the new accounting standard for insurance contracts) becomes mandatory.  It is accompanied by a regulatory impact statement.

While the standard comes into force on 1 January 2023, it will be applied to individual non-exempt insurers by changes to the condition of licence. These changes will be provided to affected insurers in coming months.  Our intention is that the new standard will apply from the date that each non-exempt insurer begins its first annual reporting period under NZ IFRS 17 (the incoming accounting standard for insurance contracts)

Non-exempt insurers should now assume that the Interim Solvency Standard 2023 will apply at relevant future dates for the purposes of projecting solvency margins. Such projections need to be made in solvency returns, in financial condition reports and for the purposes of sections 24 and 127 of IPSA.

Questions about the new standard can be addressed to [email protected].

'Review version' of the Interim Solvency Standards released

We have published a ‘review version’ of the insurance Interim Solvency Standard, determining the minimum amounts of capital insurers must hold.

Following 2 initial consultation cycles, we published an exposure draft of an Interim Solvency Standard in July 2021. We ran a quantitative impact assessment in parallel to the consultation on the standard, and we published both results in a feedback statement in March 2022.

The review version of the Interim Solvency Standard contains several amendments over the July 2021 version. Although we are conducting a partial consultation on this version of the standard, we invite interested parties to comment on any technical or workability issues not previously identified.

We will also conduct a second quantitative impact assessment on a largely voluntary basis. We invite insurers that would like to participate to download the template provided below and submit it to: [email protected] by Friday 15 July 2022.

Draft Interim Solvency Standard feedback statement released

We have released a feedback statement regarding the consultation on a Draft Interim Solvency Standard initiated on 22 July 2021. This statement contains a summary of the feedback received, indicative Reserve Bank responses, and an overview of impacts on capital measures. We have provided a file containing the full text of all non-confidential submissions.

If you have any questions about the feedback statement, please write to [email protected]. We will hold a webinar to discuss the standard on 22 May 2022. Please subscribe to the ‘Insurers’ updates on our mailing list if you want to attend.

Implementation date change

We exposed a draft Interim Solvency Standard for consultation on 22 July 2021, with the intention of coming into force on 1 January 2022. We chose this date to permit the use by early adopters of IFRS 17, the new accounting standard for insurance contracts.

During the consultation period, however, we have become aware that:

  • there do not seem to be any insurers planning to early-adopt IFRS 17;
  • many insurers might find it difficult to be ready by this date; and
  • consultation feedback is likely to require some changes to the standard as drafted.

For these reasons, we have decided to change the date of implementation of the Interim Solvency Standard to 1 January 2023.  This date aligns with the date on which insurers must adopt IFRS 17. We will have time to address some of the more significant points raised in the consultation, and insurers will have sufficient time to prepare their systems and processes.

We are currently analysing the remaining feedback from the consultation and will publish a summary of this material in due course. We intend to use the additional time and further engage with industry and stakeholders over the coming weeks and months. We will aim for the final interim standard to be published by 1 October 2022. 

If you have any questions about the change of implementation date, please write to [email protected]

Quantitative impact assessment exercise

Over September, we will conduct a quantitative impact assessment exercise with selected insurers to help us understand the capital impacts of the draft Interim Solvency Standard. To assist other insurers and their advisers with their analyses, we are publishing the template for this exercise. Once we implement the standard, this template will likely form the basis for the Insurer Solvency Return.

Readers of the instructions document should note the following:

  • These instructions were designed for the quantitative impact assessment and are not intended for other uses. We are releasing them to maximise transparency around the process.
  • The instructions include certain treatments which may or may not become part of the enforced standard, and we have no obligation to adhere to these treatments in later versions of the standard.
  • Submissions on the draft Interim Solvency Standard should reference the document published on July 22, not these instructions.

Publication of 3 consultation documents and webinar update

We are publishing 3 documents relating to the Review of the Insurance Solvency Standard.

Feedback is invited on the standard and can be provided:

  • Online, at a webinar at 10am on Thursday 5 August 2021. Please subscribe to our mailing list to express your interest in attending the webinar. An invite will be sent to our Insurance mailing list closer to the date.
  • In writing, to [email protected] (early submissions relating to substantive issues are particularly welcome and will not preclude a more comprehensive later submission)

The consultation will run until 5pm on 1 October 2021.

Consultation feedback and summary of submissions released

We have released a feedback statement relating to the consultation undertaken in the last quarter of 2020 on the principles guiding the Review. The statement describes several modifications to the principles being made in response to the submissions received.

The consultation on the structure of the solvency standards and our approach to IFRS 17 closed on 18 February 2021. We are considering submissions received and developing a feedback statement. This work will inform the development of draft interim standards, due for exposure during the third quarter of 2021.

Consultation paper released

We have released a consultation paper about the structure of our solvency standards and our approach to IFRS 17. This paper is a precursor to the interim standard(s) that will be exposed later in 2021. It raises several issues relating to how solvency standards are applied and proposes certain options for their resolution.

Review principles paper released

We have commenced a review of the Insurance Solvency Standards. An initial paper sets out the anticipated timeline for the review and exposes for consultation several principles intended to guide the review. A substantive consultation paper — responding to IFRS 17 and dealing with the structure of solvency standards — is expected to be issued in November 2020.