Insurance (Prudential Supervision) Act 2010

Reprint as at 1 March 2017

Coat of Arms of New Zealand

Insurance (Prudential Supervision) Act 2010

Public Act
 
2010 No 111
Date of assent
 
7 September 2010
Commencement
 
see section 2
Note

Changes authorised by subpart 2 of Part 2 of the Legislation Act 2012 have been made in this official reprint.

Note 4 at the end of this reprint provides a list of the amendments incorporated.

This Act is administered by the Reserve Bank of New Zealand.

Contents

1Title
2Commencement
3Purposes
4Principles to be taken into account under this Act
5Overview
6Interpretation
7Meaning of contract of insurance
8Meaning of carrying on insurance business in New Zealand
9Bank may declare that person is not carrying on insurance business in New Zealand in certain circumstances
10Meaning of associated person and holding entity
11Application of Act to friendly societies and credit unions
12Bank’s functions under Act
13Bank must have regard to directions about Government policy objectives
14Act binds the Crown
15Persons that carry on insurance business in New Zealand must be licensed
16Offence for person who is not licensed insurer to hold itself out to be licensed insurer
17Application for licence as insurer
18Applicant must provide fit and proper policy, fit and proper certificate, and risk management programme
19Entitlement to licence
20Carrying on business in prudent manner
21Conditions of licence
22Bank may modify conditions of licence
23Offence to fail to comply with conditions of licence
24Licensed insurer must report likely failure to comply with solvency margin imposed under licence conditions
25Bank must notify applicant of decision and give notice on register
26Bank must be notified before control is obtained
27Bank must be notified before corporate form is changed
28Bank must consider whether it is still satisfied as to licensing matters
29Offence to fail to notify or provide information
30Cancellation of licence
31Assignment of liabilities to enable cancellation
32Bank’s approval of assignment
33Effect of assignment
34Licensed insurer must be subject to fit and proper policy for directors and relevant officers
35Group fit and proper policy
36Fit and proper standards
37Licensed insurer must provide fit and proper certificate for new directors or relevant officers or if Bank requires certificate
38Bank may exempt overseas insurers from compliance with section 37(1)
39Power to remove directors and relevant officers
40How power to remove is exercised
41Former director or relevant officer must not accept reappointment in breach of direction
42Appeals from Bank’s decision
43Appeal to Court of Appeal on question of law
44Transfers and amalgamations must be approved
45Request for approval
46Actuarial or other report on transfer or amalgamation proposal
47Costs of report
48Bank must have regard to certain matters in considering request
49Bank’s decision on approval
50Offence to fail to comply with conditions of approval
51Requirement for approval is in addition to requirements under other enactments
52Transfer or amalgamation not invalidated
53Effect of assignment for purposes of approved transfer
54Publication of policies
54ARegister
55Bank may issue solvency standards
56Matters that may be contained in solvency standards
57Offence to fail to comply with reporting and disclosure requirements
58Incorporation by reference [Repealed]
59Bank may exempt overseas insurers from compliance
60Licensed insurer must have current financial strength rating
61Financial strength rating must refer to overseas policyholder preference
62Bank may approve rating agencies
63Licensed insurer must notify Bank of change in rating or credit watch warning
64Disclosure of current rating to policyholder
65Disclosure by insurers not required to be rated
66Policyholder may cancel if disclosure is not made
67Disclosure of rating on licensed insurer’s Internet site
68Other advertising of ratings
69Licensed insurer must give public notice of downgrade or notice to policyholders
70Licensed insurer must not disclose or advertise ratings from non-approved agencies
71Offence to fail to comply with disclosure obligations
72Overseas insurer must disclose overseas policyholder preference
73Licensed insurer must be subject to and comply with risk management programme
74Group risk management programme
75Offence to fail to comply with risk management requirements
76Requirement for licensed insurers to have appointed actuary
77Review of actuarial information in, or used in the preparation of, financial statements
78Appointed actuary’s report
79Provisions relating to auditor’s report
80Access to information
81Financial statements and interim financial information must be given to Bank
82Requirement that life insurer have statutory funds
83Overview of requirements regarding statutory funds
84Meaning of life policy
85Composite policies
86Interpretation in this subpart
87Duty of life insurer in relation to statutory funds
88Notice to Bank when fund established
89Life insurer must transfer assets on establishment
90Assets of statutory fund
91Identification of life policies referable to statutory fund
92Payments to statutory fund
93Capital payments to statutory funds
94Expenditure and application of statutory fund
95Prohibition of reinsurance between funds
96Effect of non-compliance with section 94: general
97Effect of non-compliance with section 94: certain classes of transactions
98Investment performance guarantee: limit of certain liabilities
99Investment of statutory funds
100Recording of restricted investments
101Transfer of assets between funds
102Restriction on restructure or termination of statutory funds
103Ascertainment of income and outgoings of statutory fund and providing for apportionment of income, outgoings, and liabilities
104Life insurer must keep records of income and outgoings
105Duty of directors in relation to statutory funds
106Bank may give notice
107Liability of directors
108Bank’s power to sue in name of life insurer
109Restructure of statutory funds
110Termination of statutory funds
111Additional requirements for transfer of life policies between statutory funds by endorsement
112Life insurer must allocate operating profits and losses in accordance with prescribed requirements
113Allocation of capital
114Distribution of retained profits
115Distribution of shareholders’ or members’ capital
116Application of statutory fund assets
117Liability of directors for loss to statutory fund
118Offence to fail to comply with subpart
119Bank may exempt overseas insurers from compliance with subpart
120Prudential supervision
121Supply of information by licensed insurers for purposes of prudential supervision
122Notice may require supply of information, data, or forecasts in relation to associated persons
123Associated persons may be required to supply information to licensed insurers
124Supply of information by other persons for purposes of prudential supervision
125Requirement that information, data, or forecasts be audited or reviewed
126Bank may require report relating to licensed insurers or associated persons
127Disclosure of information to Bank by auditors and actuaries
128Auditor or actuary to inform of intention to disclose
129Protection of auditors and actuaries
130Investigations
131Power to obtain information or documents
132Power to enter and search place
133Offences in relation to investigations
134Effect of final decision that exercise of powers under sections 130 and 131 unlawful
135Confidentiality of information, data, documents, and forecasts
136Limits on further disclosure of information, data, documents, or forecasts
137Application of other enactments to information, data, documents, or forecasts published or disclosed under section 135
138Bank may require licensed insurer to prepare recovery plan
139Recovery plan must be provided to Bank for approval
140Licensed insurer must comply with recovery plan
141Amendments to recovery plan
142Offence to fail to comply with recovery plan requirements
143Bank may give directions to licensed insurer
144Scope of directions to licensed insurer
145Bank may give directions to associated person
146Scope of directions to associated person
147Miscellaneous matters relating to directions
148Offence to contravene directions
149Power to remove, replace, or appoint directors, auditor, or actuary
150Offence to disclose giving of direction or notice
151Bank may apply for liquidation of insurers
152Bank may apply for High Court to reduce value of contracts of insurance
153Bank may apply for voluntary administration of licensed insurers
154Bank’s approval for voluntary liquidation or appointment of administrator by company
155Bank may make certain applications in respect of voluntary administration or liquidation and appear and be heard in proceedings
156Bank’s participation in arrangements, amalgamations, and compromises under Companies Act 1993
157Bank must be sent copy of applications under Parts 14 to 16 of Companies Act 1993
158Bank must be sent copies of certain documents and may inspect certain accounts and records
159Attendance of representative of Bank at certain meetings for licensed insurer in voluntary administration, subject to deed of company arrangement, or in liquidation
160Bank may require meeting of creditors or shareholders to appoint liquidation committee
161High Court may reduce value of contracts of insurance
162High Court may require actuarial report
163Continuation of life policies if insurer in liquidation
164Liquidator or deed administrator may apply to High Court for approval of scheme of transfer of insurance business
165Right to attend and be heard
166Approval of scheme
167Effect of approval
168Application by Bank for directions to liquidator, administrator, or deed administrator
169Valuation of policies by liquidator or deed administrator
170Statutory management of licensed insurers and associated persons
171Statutory management of overseas persons
172Date and time of appointment
173Grounds on which licensed insurer may be declared to be subject to statutory management
174Grounds on which associated person may be declared to be subject to statutory management
175Bank must give notice of recommendation
176Application of this subpart to joint statutory managers, associated persons, and subsidiaries
177Continuation of statutory management of companies restored to New Zealand register
178Considerations affecting exercise of powers by statutory manager
179Statutory manager to comply with directions of Bank
180Application of Corporations (Investigation and Management) Act 1989
181Act does not limit application of Corporations (Investigation and Management) Act 1989
182Powers to obtain documents and information
183Sale requires Bank’s approval
184Consents not required under other enactments
185Statutory manager may form body corporate to acquire business of branch of overseas person
186Vesting of property subject to security
187Proof of vesting
188Provisions applying if liabilities included in sale
189Obligations incurred by statutory manager
190Statutory manager may value contracts of insurance
191Value of contracts of insurance may be reduced by Order in Council
192Appointment of auditor and actuary
193Prior auditor or actuary ceases to hold office
194Removal of auditor or actuary
195Annual financial statements
196Annual report by statutory manager
197Termination of statutory management by Order in Council
198Termination of statutory management on liquidation
199Time of termination
200Lloyd’s underwriters must not carry on insurance business in New Zealand unless Lloyd’s holds licence
201Lloyd’s may apply for licence on behalf of underwriting members
202Lloyd’s fit and proper policy and risk management programme
203Bank must issue temporary licence to Lloyd’s pending consideration of its application
204Lloyd’s underwriters may carry on insurance business in New Zealand if Lloyd’s holds licence
205Issue of licence to Lloyd’s
206Conditions of Lloyd’s licence
207Obligations on Lloyd’s
208Provisions that do not apply in respect of Lloyd’s or Lloyd’s underwriters
209Bank may direct that Lloyd’s underwriters must not issue or renew contracts of insurance
210Agent of Lloyd’s and address for service
211Lloyd’s to give notice of enactments and bylaws
212Act does not authorise Lloyd’s underwriter to carry on any business underwriter could not otherwise have carried on
213Access to information by overseas supervisor
214Duties of person on receipt of notice under section 213
215False declarations and representations
216Liability of directors
217Defence for offences against this Act
217ATime for filing charging document
218Prohibition against falsely holding out New Zealand connection
219Certain New Zealand persons and overseas companies prohibited from using certain words in name
220Prohibition does not apply in certain cases
221Insurer’s constitution must not permit directors to act in holding entity’s best interests even though it is not in insurer’s best interests
222Power to ban certain persons from participating in insurance business
223Notice of hearing
224Appeals to High Court
225Appeal to Court of Appeal on question of law
226Register of banned persons
227Search of register
228Offence for banned person to participate in insurance business in breach of order
229Notice and service of documents
230Protection from liability
231Indemnity
232General provisions relating to declarations and exemptions
233Status of standards
234Public notice of standards
235Consultation
236Bank may amend, revoke, or replace standard
237Regulations
238Regulations may provide for exemptions
238AIncorporation by reference
239Amendments to Life Insurance Act 1908
240Repeals
241Amendments to other enactments
242Amendment to Financial Service Providers (Registration and Dispute Resolution) Act 2008
243Bank may approve certain transfers
244Bank must issue provisional licence pending consideration of application
245Bank may also issue provisional licence for insurer that is or will be in run-off
246Duration of provisional licence
247Provisional licence holder only required to comply with requirements to extent required by conditions
248Conditions of licence
249Public Trust must return deposits
250Deposit may be withdrawn in accordance with Insurance Companies’ Deposits Act 1953 or Life Insurance Act 1908
251Savings in respect of judicial management
[Repealed]
Reprint notes

The Parliament of New Zealand enacts as follows: