The Government has introduced the Insurance (Prudential Supervision) Amendment Bill which mainly makes technical amendments to the Insurance (Prudential Supervision) Act 2010, following a review by the Reserve Bank on the effectiveness of the Act.

The main amendments that are proposed include:

  • enabling the Reserve Bank to exempt a licensed insurer from the requirement to have a current financial strength rating if the insurer is in run-off;

  • removing the requirement for a licensed insurer to disclose its financial strength rating before renewing a contract of insurance if the contract is renewed more frequently than annually, the current financial strength rating was disclosed to the policyholder less than 12 months before the date of the renewal and the rating has not changed since the last disclosure was made to the policyholder;

  • in relation to the interim financial information that is required to be provided to the Reserve Bank:

    • empowering the Reserve Bank to give a notice to an insurer that allows the insurer to prepare interim financial information in accordance with requirements other than NZ GAAP (for example, regulatory requirements that apply in the insurer's home jurisdiction);

    • to reduce the preparation period for interim financial information from 5 months to 3 months, to align with the Financial Reporting Bill; and

    • if the insurer has subsidiaries, to replace the existing requirement for the insurer to prepare interim financial statements for both the group and the insurer with a requirement to just prepare interim financial statements for the group;

  • extending the condition that can currently be imposed on a licence for an insurer or its directors to certify that the other conditions of the licence have been complied with, to also require certification in relation to compliance with the Act and the regulations and other requirements imposed on licensed insurers under other enactments;

  • requiring the Reserve Bank to keep a public register of licensed insurers; and

  • extending the duration of a provisional licence past 8 September 2013 if the provisional licence holder is subject to an insolvency proceeding or process.

The Bill also amends section 69 of the Reserve Bank of New Zealand Act 1989. Section 69 requires the Bank to keep a register of registered banks and the amendment provides for a common standard across that Act and the Insurance (Prudential Supervision) Act 2010.