The Reserve Bank of New Zealand (RBNZ) has launched a consultation process to gain feedback on the penalties and enforcement tools available when supervising insurers and on its powers to manage distressed insurers.
The consultation, which will last until May 20, is the third out of five consultations the RBNZ is holding as part of its review of the Insurance (Prudential Supervision) Act (IPSA) 2010. RBNZ will host a webinar for interested parties on March 22.
The IPSA includes several criminal penalties for non-compliance, and RBNZ said it is discussing introducing other types of sanctions and penalties to allow a more “proportional and graduated” response to compliance issues. The regulator said it is providing a longer consultation period because of multiple industry consultations currently underway.
“A well-designed enforcement framework should provide a range of credible responses to compliance problems so we can respond in a way that is proportional to the issue we’re addressing,” said Christian Hawkesby, RBNZ deputy governor and general manager for financial stability.
This consultation reviews RBNZ’s powers to obtain information from insurers to inform its supervision duties. It discusses introducing a compulsory on-site inspection power and a breach-reporting system, where insurers are required to monitor their own regulatory compliance and communicate breaches to the regulator.
It also deals with RBNZ’s role in dealing with distressed insurers, including insolvency provisions and resolution powers. This includes exploring a possible revamp of the resolution framework by asking some insurers to undertake resolution planning and by revisiting how statutory management should operate for insurers.
