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

Jul 2018 Insurance

The Reserve Bank of New Zealand is satisfied that FM Insurance Company Limited is no longer carrying on insurance business in New Zealand according to the Insurance (Prudential Supervision) Act 2010 (the Act). At the request of FM Insurance Company Limited, the licence issued to it on 28 June 2013 under section 19 of the Act was cancelled on 17 July 2018 pursuant to section 30(1) of the Act.

Jul 2018 Insurance

The Reserve Bank released a consultation paper on proposed changes to the Solvency Standards in response to NZ IFRS 16 Leases.

Read the consultation paper.

Jun 2018 Insurance

The Reserve Bank sent a warning to Pacific International Insurance Pty Limited (Pacific International) for failing to include its solvency ratio in its New Zealand branch financial statements for three consecutive years.

Read the notice on the Industry notice page

Apr 2018 Insurance

The Reserve Bank is sending a warning to First American Title Insurance Company of Australia Pty Limited (First American) for failing to disclose an overseas policyholder preference to a policyholder.

Read the notice on the Industry notice page.

Mar 2018 Insurance

The Reserve Bank of New Zealand has published the March 2018 edition of the Insurance Industry Update. Read the March 2018 update (PDF 132KB).

For previous updates, go to the Publications and reports for the insurance sector page.

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