Most Read Contributor in New Zealand, September 2016
Anyone carrying on insurance business in New Zealand will be
under the Reserve Bank's supervision and will need to be
licensed and comply with a number of ongoing prudential
requirements under the new Insurance (Prudential Supervision)
Insurers have a transitional period of three years to fully
comply with the Act's provisions.
This Brief Counsel gives a timeline of key dates for each step
of the licensing process.
Are you required to be licensed?
Broadly any person "carrying on business in New
Zealand" that directly or indirectly accepts risk for a New
Zealand policyholder under a contract of insurance (including a
re-insurance contract) must be licensed. The requirement applies to
all insurers, including life insurers, professional indemnity
insurers, captive insurers, re-insurers and the insurance
activities of incorporated societies.
"New Zealand policyholders" are those who are
ordinarily resident in New Zealand or incorporated or formed in New
Carrying on business in New Zealand
The Act's definition of "carrying on business in New
Zealand" imports the meaning of that phrase from the Companies
Act 1993. Importantly, however, the Act makes a consequential
amendment to the Companies Act to provide that an overseas company
does not carry on business in New Zealand merely because it enters
into a contract of insurance as an insurer with a New Zealand
What will you have to do?
The Act provides for insurers to obtain a provisional licence
then a full licence during the three year transition (with
indications from the Reserve Bank that the turnaround time for the
provisional licences will be short).
Insurers will need to comply with the Act while operating under
a provisional licence, to the extent provided for in that licence.
Once fully licensed, they will need to comply with a number of
ongoing requirements, as well as any conditions imposed on their
licence by the Reserve Bank.
Maximum penalties for operating without a licence, when the new
regime is fully in effect, will be $1 million for a body corporate
and 3 months imprisonment or a fine of $200,000 for an
An indicative compliance timetable is set out below.
By 31 December 20101
Insurers must notify the Reserve Bank:
whether they are carrying on insurance business in New Zealand,
whether they intend to continue to do so after 7 March
Insurers must apply for a provisional
An insurer will be entitled to a provisional licence if the
was carrying on insurance business in New Zealand at 30
has notified the Reserve Bank of their intention to continue
operating in New Zealand, and
has applied or purported to apply for a licence and taken
reasonable steps to prepare a compliant fit and proper policy and
risk management programme
By 7 September 2013
Insurers must have a full licence or have transitioned
out of the New Zealand market
Leaving the market
The Reserve Bank can issue a provisional licence to facilitate
an insurer's exit from the New Zealand market by 7 September
2013 full implementation deadline. Insurers intending to leave the
industry will need to work with officials to ensure their exit
strategies are commercially sensible and acceptable to the Reserve
Bank. We expect there will be an element of collaboration with the
regulator in this respect.
Other key dates:
By 30 November 2010
Approved rating agencies confirmed
By 31 December 2010 (Reserve Bank notification
Solvency Standards to be released by the Reserve Bank
Consultation on "fit and proper standards" to be
The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
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