Reinsurance clampdown

The Reserve Bank’s new standards came into effect on January 1. Its new reinsurance provisions come in over a phased transition period.

The standards mean reinsurance agreements that essentially work as a loan to the insurer with a low risk of ever being called in will now have to be reflected on the company’s balance sheet as a debt.

The new list of criteria for reinsurance arrangements will affect all life insurers but for most it will be a case of rewording or fixing the treaty to bring it in line with the new requirements.

But for Partners Life, which relies heavily on reinsurance to write new business, the changes may be more disruptive.