Regulation of insurance sector

Mar 2021 Insurance

We have today released a feedback statement (PDF 700KB) on the consultation relating to Solvency Standard Review principles. We thank those who provided submissions. We are working through submissions received for the consultation on the structure of the solvency standards and our approach to IFRS 17.

Jan 2021 Insurance

In November the Reserve Bank published a consultation paper on the scope of the Insurance (Prudential Supervision) Act 2010 and the regime for regulating overseas insurers. The paper anticipated that the last date we would receive submissions would be Thursday 18 February 2021. This has now been extended for an extra month with the last date for submissions now Friday 19 March 2021. Note that there is no change to the final date for submissions on the solvency consultation paper on IFRS 17 and the structure of the solvency standards – this remains Thursday 18 February 2021.

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 [email protected] to register for the webinar and/or to raise questions for discussion at the webinar.

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.