The Insurance (Prudential Supervision) Act 2010 (IPSA)
The Reserve Bank’s regulation and supervision of insurers is underpinned by the Insurance (Prudential Supervision) Act 2010 (IPSA), which charges the Reserve Bank with promoting the maintenance of a sound and efficient insurance sector, and promoting public confidence in the insurance sector.
Regulation sets the legal and prudential framework insurers must meet. Supervision focuses on how insurers comply with those requirements in practice.
More information about the legislation
Find links below to the IPSA and the commencement orders that brought various sections of the IPSA into force on specific dates.
Read the Insurance (Prudential Supervision) Act 2010
Read the Insurance (Prudential Supervision) Act Commencement Order 2010
Read the Insurance (Prudential Supervision) Act Commencement Order (No 2) 2010
Read the Insurance (Prudential Supervision) Amendment Act 2013
How we regulate insurers
We administer the IPSA, which applies to all insurers carrying on business in New Zealand (as defined by the IPSA).
The IPSA promotes:
- the maintenance of a sound and efficient insurance sector
- public confidence in the insurance sector.
The IPSA includes:
- a licensing system for insurers, based on meeting the IPSA’s prudential requirements
- supervision by the Reserve Bank of compliance with the prudential requirements
- powers to take action in respect of insurers in financial distress or other difficulties, or in respect of non-compliance with this Act.
Read about the review of the IPSA
Regulations
The insurance sector is also subject to regulations, including the Insurance (Prudential Supervision) Regulations 2010. These regulations cover matters such as:
- prescribed jurisdictions for home and/or host regulatory recognition and other provisions
- reassessment requirements for fit and proper certification
- matters relating to disclosing overseas policyholder preference
- limited exemptions for insurers with annual, gross, written premiums less than $1.5 million
- deeming that certain consumer credit insurance contracts are not life policies when issued by a non-life insurer
- statutory funds.
Read the Insurance (Prudential Supervision) Regulations 2010
Standards
Licensed insurers must comply with prudential standards issued under the IPSA, including solvency standards.
Financial strength-rating agencies
We approve financial, strength-rating agencies for the purposes of Sections 60–71 of the IPSA. This page lists the approved rating agencies and has guidelines to help agencies understand the IPSA’s requirements.
Financial strength-rating agencies
How we supervise insurers
Supervision is the ongoing monitoring of insurers to assess their compliance with prudential requirements and the risks they pose to the insurance sector.
All licensed insurers are subject to supervisory oversight. The IPSA’s regulatory framework places responsibility and accountability for an insurance business primarily with the insurer’s Board and senior management.
Our approach to supervision
Our supervision of insurers:
- is risk based and proportionate
- focuses on outcomes
- avoids imposing unnecessary compliance costs
- is consistent with our approach to supervising other financial institutions.
We take a risk-based approach to supervision, focusing our resources on insurers that are most significant to the purposes of the IPSA or pose greater risks to financial stability. We assess significance based on factors such as premiums, insurance liabilities, and risk profile.
Our supervisors monitor compliance and build an understanding of insurers’ business models, governance, and risks through:
- analysis of insurer data and returns
- regular engagement and meetings
- thematic and entity specific reviews.
Where we identify concerns, we may take supervisory or enforcement action to address non-compliance or emerging risks. This can include setting licence conditions or using statutory powers under the IPSA.