Regulation and supervision Insurers Regulation of insurance sector

Regulation of insurance sector

The Insurance (Prudential Supervision) Act 2010 is administered by the Reserve Bank for the purposes of:

  1. promoting the maintenance of a sound and efficient insurance sector; and
  2. 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:

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.

Read the Insurance (Prudential Supervision) Amendment Act 2013.

Regulations

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.

Read the Insurance (Prudential Supervision) Regulations 2010.

Standards

Licensed insurers need to adhere to the following standards as part of the prudential requirements of the Reserve Bank.

Standards for insurers
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Fit and proper standard
Information on the Fit and proper standard for licensed insurers, including the current Fit and proper standard.
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Solvency standards
Information on solvency standards, including current and earlier solvency standards. One or more solvency standards may apply to a licensed insurer under the licensed insurer's conditions of licence.
Financial strength rating agencies for insurers
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Financial strength rating agencies
A list of the financial strength rating agencies approved by the Reserve Bank for the purposes of sections 60-71 of the Act and guidelines to assist these agencies in understanding the Act's requirements.

Related to this page

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Generic Page Thumbnail Licensing
Generic Page Thumbnail Supervision of insurers
Generic Page Thumbnail New Zealand Insurer Data Collections
Generic Page Thumbnail Publications and reports for the insurance sector
Generic Page Thumbnail Relationship with other regulatory and supervisory bodies
Generic Page Thumbnail Contact the insurance team
Generic Page Thumbnail Consultations and policy development for insurers
Insurance news & updates

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.

Jul 2020 Insurance

The Reserve Bank of New Zealand issued a licence under section 19 of the Insurance (Prudential Supervision) Act 2010 (the Act) to Resolution Life New Zealand Limited on 22 June 2020.

The Reserve Bank of New Zealand has given notice pursuant to section 28(2) of the Act that it remains satisfied of the matters in section 19(1)(a) to (m) of the Act in respect of the acquisition of AMP Life Limited by Resolution Life Australia Pty Ltd.

Read more about the AMP Life sale

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

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