Financial Regulation Update: IPSA review back underway and Solvency Standards review commences
The Reserve Bank has announced the relaunch of its review of the Insurance (Prudential Supervision) Act (IPSA), which had previously been deferred due to the RBNZ Act review and the implications of the COVID-19 pandemic. A series of consultation papers seeking feedback on various aspects of IPSA will be released over the coming months. The first consultation paper is expected to be issued in November 2020 and will cover the scope of IPSA and its treatment of overseas insurers.
The indicative timeline for the consultation process is:
Q4 2020: Consultation on Scope, Overseas Insurers
H1 2021: Consultation on Statutory Funds, Solvency Buffers
H2 2021: Consultation on Governance/Appointed Actuary, Disclosure
H1 2022: Consultation on Supervisory Processes, Technical Amendments
H2 2022: Consultation on Regulatory Tools, Distress Management
The consultation process will be followed by Cabinet decisions, where required, and drafting of the legislation. The legislative process is expected to occur in the second half of 2023 at the earliest.
Solvency Standards review
The Reserve Bank has also announced the launch of a review of the associated Insurer Solvency Standards. The timeline for the review includes a number of different phases, with the aim of a final standard being issued in late 2023. At this stage the Reserve Bank is seeking commentary on the principles and timeline set out in the review launch paper which is available here.
Broader Insurance law reform context
The Reserve Bank's announcement recognises that other regulatory reform currently underway will have a bearing on the IPSA review. This includes:
- The Reserve Bank Act review – in relation to which (i) the Reserve Bank of New Zealand Bill (Institutional Bill) is currently before the House; and (ii) a consultation on aspects of a proposed new "Deposit Takers Bill" is closing this month. See our updates on this review here.
- The Conduct of Institutions Regime – which is due to apply to licensed insurers undertaking certain relevant activities. The bill related to this regime is awaiting second reading and an exposure draft of regulations relating to the regime is expected to be circulated by the end of this year. See our update here.
- The Insurance Contracts Law review – in which a consultation on the exposure draft of new legislation is due to begin in Q1 2021. See our update on the past Cabinet decisions made in that review here.
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