Life insuers get licence plates

September 7 was important for life insurers: it was the date by which any insurer wishing to continue operating must have been issued a licence by the Reserve Bank in accordance with the Insurance Prudential Supervision Act (IPSA). As part of the post-GFC package of laws overhauling almost the entire financial sector this rarely gets any attention. Yet it has been the cause of a great deal of work within insurers over the past couple of years.

Insurers have had tougher standards to meet, and while most of them were already met – especially by those who had already targeted meeting Australian standards, usually because of an Australian parent or prescient head of finance – they have not had to demonstrate compliance with an active, engaged, local regulator.

In the past some insurers did not obtain a financial stability rating, and as a part of the relicensing process had to get one. That entailed visits from rating houses and providing lots of reports and answering questions. In some cases it meant obtaining additional capital in order to achieve a desired rating, often from within a corporate structure, or raising it from investors.

Then there was the RBNZ process.