Regulation of insurance sector

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

(a) promoting the maintenance of a sound and efficient insurance sector; and

(b) 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 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.

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.

Standards

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

Fit and proper standard

The Fit and Proper Standard is made under section 36 of the Insurance (Prudential Supervision) Act 2010 and sets out the requirements for a fit and proper policy required under sections 34 – 35 of the Act. The standard applies to all licensed insurers, and the requirement for a licensed insurer to comply with this standard is continuous.

Fit and proper standard (PDF 292KB)

Solvency Standards

Solvency standards are issued under section 55 of the Insurance (Prudential Supervision) Act 2010. One or more solvency standards may apply to a licensed insurer under the licensed insurer's conditions of licence.

Current Standards

The following solvency standards are current.

Licensed insurers will progressively transfer from the earlier standards to the current standards over the 2015 calendar year. Conditions of licence will be amended progressively over 2015 to apply the relevant current standard(s) as at and from the licensed insurer's annual financial balance date in 2015.

Title

Issue Date

Commencement Date

Solvency Standard for Life Insurance Business 2014 (PDF 822KB)

17 December 2014

1 January 2015

Solvency Standard for Non-life Insurance Business 2014 (PDF 846KB)

17 December 2014

1 January 2015

Solvency Standard for Captive Insurers Transacting Non-life Insurance Business 2014 (PDF 249KB)

17 December 2014

1 January 2015

Solvency Standard for Non-life Insurance Business in Run-off 2014 (PDF 247KB)

17 December 2014

1 January 2015

Solvency Standard for New Zealand Local Government Insurance Corporation Limited 2014 (PDF 195KB)

17 December 2014

1 January 2015

Solvency Standard for Variable Annuity Business 2015 (PDF 292KB)

10 April 2015

10 April 2015

Earlier Standards

The following standards continue to apply to licensed insurers until the licensed insurer transitions to the current standard(s) in accordance with the licensed insurer's conditions of licence.

Title

Issue Date

Amendment Date

Solvency Standard for Life Insurance Business (PDF 819KB)

1 August 2011

(incorporating amendments to December 2014)

17 December 2014

Solvency Standard for Non-life Insurance Business (PDF 663KB)

11 October 2011 (incorporating amendments to December 2014)

17 December 2014

Solvency Standard for Captive Insurers Transacting Non-life Insurance Business (PDF 597KB)

28 October 2011

(incorporating amendments to December 2014)

17 December 2014

Solvency Standard for Non-life Insurance Business in Run-off (PDF 651KB)

4 April 2012 (incorporating amendments to December 2014)

17 December 2014

Solvency Standard for Civic Assurance (PDF 201KB)

29 August 2013

(incorporating amendments to December 2014)

17 December 2014

Policy Position Paper for the Solvency Standard for Non-Life Insurance Business

The following policy position paper is referred to in the Solvency Standard for Non-life Insurance Business 2014 and the Solvency Standard for Non-life Insurance Business:

Policy Position Paper for the Solvency Standard for Non-life Insurance Business (PDF 76KB)

There have been no changes made to this paper as part of the 2014 reissue of the solvency standards.

Revoked Standards

The following standards have been revoked and are no longer applicable to any licensed insurer.

Title

Cease Date

Solvency Standard for Non-life Insurance Business – AMI Insurance Limited (PDF 782 KB)

17 December 2014

Solvency Standard for Captive Insurers Transacting Life Insurance Business (PDF 597 KB)

17 December 2014

Solvency return and Solvency exempt return

Please go to the NZ Insurer Data Collections webpage for the forms required to provide solvency returns to the Reserve Bank and for reporting by solvency exempt insurers.

Regulatory impact analysis

Title

Document

Issue Date

Solvency Standard for Variable Annuity Business 2015

Regulatory impact statement (PDF 364KB)

April 2015

Solvency Standards issued December 2014

Regulatory impact statement(PDF 118KB)

September 2014

Solvency Standards issued 2011 through to 2012

Regulatory impact statement (PDF 254KB)

April 2012