Future policy development

Dec 2020 Insurance

In December the Reserve Bank issued formal directions to Pacific International Insurance Pty Limited following repeated failings with its New Zealand regulatory reporting and compliance obligations.

The directions were made under section 143 of the Insurance (Prudential Supervision) Act 2010. Section 143 gives the Reserve Bank the ability to direct a licensed insurer to carry on its business in a specified way and/or take certain specified actions to address regulatory failures. This action follows warnings issued to Pacific International in 2018 for failing to include its solvency ratio in its New Zealand branch financial statements for three consecutive years.

Nov 2020 Insurance

Solvency principles:

We would like to thank those who made submissions on the principles underlying the Solvency Standards Review. The input we have received is valuable and is under consideration. We will produce a feedback statement in due course.

New consultations:

The Reserve Bank has released four documents relating to insurance policy:

• a consultation paper about the structure of our solvency standards and our approach to IFRS 17;
• a consultation paper about the scope of the Insurance (Prudential Supervision) Act 2010 and the regulatory regime for overseas insurers; and
• non-technical summaries of both consultation papers

These documents can be found on the Solvency Standard Review and IPSA Review pages respectively.

Feedback is invited on the two consultation papers. A webinar will be held to discuss them at 10am on Monday December 14. Please email rbnz-info@rbnz.govt.nz to register for the webinar and/or to raise questions for discussion at the webinar.

Nov 2020 Insurance

The Reserve Bank has published a further review on how licensed insurers assess their exposure to catastrophe risk. This follows on from a similar review completed in 2016. Insurers were asked to provide information on their catastrophe risks in respect of governance, processes for assessment of risks, any modelling undertaken, the controls to limit exposures, and mitigation to reduce the effects of catastrophes. This has allowed us to better understand how insurers are prudently managing their catastrophe exposures, and to monitor changes since the 2016 survey.

Download the 2020 Insurer catastrophe risk survey report (PDF 550KB)

Aug 2020 Insurance

The Reserve Bank is publishing an amended Insurer Solvency Return and Guidance Note (v5.3) to improve the information provided through projections of solvency. These documents will be in-force from 1 September 2020.

Table 1.6 of the Insurer Solvency Return now requires non-exempt insurers to provide projections on two bases – with and without capital movements (such as dividends and capital injections). Paragraph 55 of the Guide describes how this table should be completed.

Paragraph 57 of the Guide now advises on which accounting standards, bases & methodologies should be employed. Please note that at this time the impact of IFRS17 (“Insurance Contracts”) on solvency calculations is not known with a high degree of certainty, and that the Reserve Bank will issue a further communication when this view changes.

The Reserve Bank anticipates that the next set of substantive changes to the Insurer Solvency Return and Guide will be released in early 2022, in conjunction with expected updates of solvency standards.

Jun 2020 Insurance

The Reserve Bank has completed the thematic review of the Appointed Actuary role and regime, with the report published in June 2020

• Read the report