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Insurance law provides greater certainty

The enactment of the Insurance (Prudential Supervision) Bill provides increased certainty for New Zealand insurance policy holders, Finance Minister Bill English says.

The Bill, passed last week, makes the Reserve Bank of New Zealand the prudential regulator of all insurance providers that carry out insurance business in New Zealand. It is the first time the New Zealand industry has been subject to legislated prudential regulation.

"The Bill's main purpose is to promote the maintenance of a sound and efficient insurance sector. Policyholders will benefit from greater certainty their insurer has sufficient financial strength to ensure it can pay claims when they are made," Mr English says.

"In addition, it is a clear signal to the rest of the world that New Zealand is aligning itself with established trends in overseas insurance regulation.

"The strong consultative and collaborative approach followed in developing this legislation has ensured the Act does not impose excessive or unnecessary compliance costs on providers and is generally accepted by the industry," Mr English says.

The implementation phase of the new Act will include a transitional period of up to three years to enable insurers to bring themselves into compliance with the new requirements.

Media contact: Grant Fleming 021 277 9869