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Insurance data upgrade

We are updating and consolidating our suite of insurance reporting templates in order to transition regulatory reporting under NZ IFRS 17 and the new Interim Solvency Standard.

Insurer data upgrade

International financial reporting standards are created by international standard-setting boards. IFRS 17 is designed to enable better understanding of insurer’s exposure, profitability and financial position and to facilitate comparison across similar insurance companies. Updates to financial standards are infrequent — the new standard replaces IFRS 4, which came into effect from 1 January 2005.

The New Zealand standard, NZ IFRS 17, comes into mandatory effect for insurers from the start of the financial year, commencing on or after 1 January 2023. We issued the new Interim Solvency Standard 2023 on 20 September 2022 and it is consistent with NZ IFRS 17. It also comes into mandatory effect for insurers from the date specified in each insurer’s modified licence conditions (intended to be the same date as the start of NZ IFRS 17).

Insurer data reporting changes

Our data reporting framework is based on the existing accounting treatment. The introduction of NZ IFRS 17 changes underlying accounting concepts which underpin financial and solvency reporting. 

We are updating our reporting, which will now consist of an Annual Insurer Report (AIR) and a Quarterly Insurer Report (QIR).

On 23 November 2022, we released drafts of a new AIR template and associated Definitions.

The proposed new QIR will be based on the AIR but with slightly less detail. The financial reporting is based on management accounts instead of audited financial statements.

Every insurer’s licence conditions, and many notices issued under the Insurance (Prudential Supervision) Act (IPSA), will be updated before the final financial year end date prior to NZ IFRS 17. A first letter sent to each insurer will provide an explanation of all of the proposed changes and draft notices. A second letter will implement the changes by modified licence conditions and modified and new notices.

This process has commenced for insurers with December balance dates and will continue through quarter 1 and quarter 2 of 2023 for insurers with other balance dates.

Structural changes

As previously communicated directly to insurers, a number of existing insurer returns have been consolidated into the new AIR (and similarly will be for the QIR).

For more information on existing insurer returns, please see Reporting resources for insurers.

Reporting resources for insurers

Changes to reflect amended accounting and Reserve Bank solvency standards

Financial data included in the returns has been updated to reflect NZ IFRS 17. 

Data in respect of the Reserve Bank solvency requirements has been updated to reflect the Interim Solvency Standard 2023.  Content in the proposed new AIR is similar to the quantitative impact assessment spreadsheet we supplied to insurers in May 2022, but with some additional disclosures.

Exposure data largely unchanged

Exposure data collected is largely unchanged but has been moved to a separate sheet, called ‘statistics insurance’.  Some terminology has been amended.

Discontinued reporting

The following existing reporting will be discontinued:

  • Monthly Insurer Report for some insurers once the section 121 notice has been revoked.
  • Insurer Catastrophe Claims Return for some insurers once the section 121 notice has been revoked.
  • Insurer Foreign Business Return for some insurers once the section 121 notice has been revoked.

Additional reporting

The draft AIR template contains some additional reporting that does not exist in the current insurer returns, to address information gaps and to support supervision. 

In summary, these are:

  • Financial data in respect of New Zealand inwards reinsurance by class of insurance instead of by type of insurance.
  • Financial forecasts (limited detail) including comparison of actual with prior forecast.
  • Supplementary financials (limited detail) for overseas insurers with material NZ insurance business not in an NZ branch.
  • RBNZ solvency:
    • more detailed workings and additional commentary
    • large reinsurance counterparty exposures
    • large asset counterparty exposures
    • some information on use of discretions in the solvency calculations
    • movement in solvency margin over the financial year
  • Home jurisdiction solvency:
    • new requirement for overseas insurers subject to RBNZ solvency requirements to also report on home jurisdiction solvency
    • figures in both home currency and New Zealand dollars to aid identification of currency translation errors
    • breakdown of capital or solvency requirement into the main risk categories
  • A summary reconciliation of any differences between opening balances and prior closing balances.

Request for feedback

We will be finalising the new return templates in late February or March 2023.  Please provide feedback directly to [email protected] or through your industry body by 16 December 2022

Feedback is requested on:

  • the draft AIR
  • the draft Definitions, and
  • the differences in content for the new QIR.