NZ Insurance (Prudential Supervision ) Bill - Consultation Draft
The proposed new regulator of insurers in New Zealand,
the Reserve Bank of New Zealand, has released a consultation draft
of the Insurance (Prudential Supervision) Bill. The Bill is to be
introduced into Parliament later this year. In this update we
highlight some of the changes to the current regulatory environment
proposed in the Bill.
The draft Bill requires the Reserve Bank of New Zealand (Bank)
to:
Issue licences to every person carrying on insurance business
in New Zealand.
Undertake prudential supervision of licensed insurers.
Enforce the Bill against licensed insurers who fail to comply
with it.
Registration
Every person carrying on insurance business in New Zealand must
hold a licence. A person carries on insurance in New Zealand if the
person or entity:
Is a body corporate, an overseas company liable to be
registered in New Zealand or is ordinarily resident in New
Zealand.
Acts as an insurer in New Zealand.
Is liable to policyholders in New Zealand.
An overseas insurer that is not resident in New Zealand and that
is not a company (eg a Protection and Indemnity Club) appears to be
outside this definition. However, the licensing requirements in the
draft Bill do address unincorporated bodies outside New Zealand.
This express inclusion in the licensing requirements makes it
unclear whether unincorporated bodies outside New Zealand are meant
to be subject to the licensing regime or not.
In order to obtain a licence, the applicant must:
Hold a current credit rating from a credit rating agency
approved by the Bank (reinsurers, captives, small insurers below an
as yet unspecified GWP and start-ups trading for less than a year
are exempt).
Be able to carry on the business in a prudent manner taking
into account their financial resources, level of internal controls,
size and type of risks being insured, level of reinsurance,
non-insurance activities and related party transactions.
Be able to meet the approved solvency standards (to be
specified).
If it is a life insurer, have at least one statutory fund (as
detailed in the draft Bill) in respect of its life insurance
business.
Be able to comply with any proposed conditions upon which the
licence will be granted.
Provide a fit and proper policy to the Bank that governs the
qualifications, requirements and any other criteria that directors
and relevant officers (CEO, CFO and actuary) must have in order to
be appointed to and to continue to hold office in the insurer.
Confirm each proposed...
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