Reserve Bank of New Zealand (RBNZ), which gains its authority
under the Insurance (Prudential Supervision) Act 2010. Any entity
that assumes liabilities to New Zealand policyholders under a
contract of insurance is an insurer and requires a licence from and
is regulated by the RBNZ.
The provision of insurance broking services and other insurance
intermediation services is regulated, although no authorisation is
required under New Zealand legislation.
The provision of advice or other services in relation to
insurance products is regulated and the provider may need to be
registered and/or authorised.
an insurer may be a local entity or a branch of a foreign
the directors and other relevant officers must be "fit and
an insurer must hold a current financial strength rating from
an approved rating agency.
Brokers, financial advisers & insurance agents – may
be a local entity, branch of a foreign broker or individuals.
Yes – consent of the Minister of the Crown is required for
acquisition of rights or interests of 25 per cent or more of an
entity worth more than NZD100 million.
NZD1.22 = USD 1.00 at 1 January 2014
Consent of the RBNZ must be obtained for any change of control:
control means ? 50 per cent of the company's voting rights.
Actual Solvency Capital (ASC):
Life insurer – ASC of NZD5 million
General insurer – ASC of NZD3 million ($1 million for
Risk based capital
Solvency Margin is the excess of Actual Solvency Capital (ASC)
over Minimum Solvency Capital (MSC), expressed as a dollar
ASC is the total of capital less deductions from capital.
MSC = Total Solvency Requirement (TSR) less, in the case of life
insurance, the aggregate of Policy Liabilities and Other
TSR = sum of capital charges for certain key business metrics
including: insurance risk, catastrophe and asset risks (including
credit, equity & property risk, foreign currency & interest
rate risk, asset concentration risk and reinsurance recovery
Policy Liabilities are valued on a best estimate basis and Other
Liabilities are valued under NZ GAAP.
Any likely breach over the next three years must be
Yes – for subsidiaries of NZ insurers. Insurer
subsidiaries must be consolidated and the solvency standards
applied to the consolidated group. Non-insurance subsidiaries are
treated as related party equity investments, subordinated loans or
Life Insurers must maintain and keep distinct and separate from
other assets, one or more statutory funds into which all amounts
received by the insurer in respect of the business of that fund
must be credited. Investments made are assets of the fund.
There is no protection fund for non-life policyholders.
On liquidation of an insurer, (other than from a life
insurer's statutory fund) there is no priority for
policyholders and the Court has the power to reduce the value of
contracts of insurance.
Yes. The RBNZ may on application approve a transfer of all or
part of an insurer's NZ business to another insurer that meets
the licensing requirements. The RBNZ must have regard to the
policyholders' interests and may request an actuarial report.
The transfer takes effect as a novation of each policy.
On insolvency, a liquidator or administrator may apply to the
High Court for approval of a scheme of transfer of insurance
There is no express restriction on outsourcing. However insurers
must have a risk management policy and, depending on the nature and
scope of the activity to be outsourced, such outsourcing may need
to be disclosed by way of a modification to the risk management
policy. In addition, the insurer must ensure that at all times it
meets the conditions for entitlement to hold its licence.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Contractors and principals should ensure they have appropriate insurance coverage instead of relying on indemnity clauses.
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