Reserve Bank relaunches Insurance Act review

After being postponed by Covid, the Reserve Bank today relaunched their review into the 2010 IPSA.

Thursday, October 1st 2020, 10:48AM

Geoff Bascand

The Reserve Bank – Te Pūtea Matua is today relaunching the review of the Insurance (Prudential Supervision) Act (IPSA), and commencing a review of the associated Insurer Solvency Standards.

The review was deferred due to implications of the Covid-19 pandemic. The original IPSA legislation became law in September 2010 and there have been a number of notable developments since then, deputy governor and general manager of financial stability Geoff Bascand says.

“Since 2010, the Reserve Bank and insurers have gained considerable experience across the legislation, helping us to see what works well and what could be improved.”

“Over the next twelve months, we intend to release consultation papers seeking feedback on the scope of the legislation – looking at which organisations and products should be captured, how ‘insurance’ is defined, the treatment of overseas insurers, statutory funds and the solvency regime.”

An initial substantive consultation paper – on the scope of the Act and its treatment of overseas insurers – is expected to be issued in November.

Alongside of this, the Reserve Bank is also launching a review of the Insurer Solvency Standards that govern the minimum amount of capital that insurers are required to hold.

“Best practice regulation includes monitoring and regularly reviewing existing regulations to ensure they remain robust and fit-for-purpose. The review is designed to help the Reserve Bank fulfil its regulatory stewardship role by monitoring and reviewing New Zealand’s system for measuring and reporting on insurance capital,” Bascand says.

Feedback from insurers and other market participants, and the experience of RBNZ supervisors in overseeing the action of the standards will also be factored into the solvency review.

The Reserve Bank is calling for feedback from interested parties regarding the review and the structure of solvency standards.

Tags: insurance insurance law insurer solvency RBNZ Reserve Bank