Regulation of insurance sector
The Insurance (Prudential Supervision) Act 2010 is administered by the Reserve Bank for the purposes of:
- promoting the maintenance of a sound and efficient insurance sector; and
- promoting public confidence in the insurance sector.
The Act applies to all insurers carrying on business in New Zealand (as defined by the Act) and includes:
- a licensing system for insurers, based on meeting the Act's prudential requirements;
- supervision by the Reserve Bank of compliance with the prudential requirements; and
- powers under the Act for the Reserve Bank in respect of insurers in financial distress or other difficulties.
The Insurance (Prudential Supervision) Act 2010 and the commencement orders that brought various sections of the Act into force on specific dates are available on the Legislation.govt.nz website:
- Insurance (Prudential Supervision) Act 2010
- Insurance (Prudential Supervision) Act Commencement Order 2010
- Insurance (Prudential Supervision) Act Commencement Order (No 2) 2010
Through the licensing phase of the Act a number of technical issues were identified as appropriate for reform and changes were made on 4 September 2013 under the Insurance (Prudential Supervision) Amendment Act 2013 relating to those technical issues.
The insurance sector is also subject to regulations.
The Insurance (Prudential Supervision) Regulations 2010 relate to:
- prescribed jurisdictions for home/host regulatory recognition and other provisions;
- reassessment requirements for fit and proper certification;
- matters relating to the disclosure of overseas policyholder preference;
- limited exemptions for insurers with annual gross written premium less than $1.5 million;
- deeming certain consumer credit insurance contracts, where issued by a non-life insurer, not to be life policies; and
- statutory funds.
Licensed insurers need to adhere to the following standards as part of the prudential requirements of the Reserve Bank.