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95—1
The primary purpose of this Bill is to encourage the maintenance of a sound and efficient insurance sector that promotes confidence among policyholders and the general public. The Bill establishes a licensing regime for insurers and prudential regulations that place strong reliance on self-discipline so that compliance is largely self-administering although supervised by the Reserve Bank of New Zealand (the Reserve Bank or the Bank).
The Bill will replace existing outdated legislation and fill gaps where no prudential regulation currently exists, as well as remove inconsistent legislative application between different insurance sectors.
The Bill achieves its purposes by requiring insurers that carry on insurance business in New Zealand to—
obtain a licence (having met the criteria for eligibility):
maintain solvency as defined by regulatory standards:
obtain and publish financial strength ratings:
meet fit and proper standards for directors and relevant officers:
have and comply with a risk management programme:
appoint an actuary:
prepare an annual financial condition report and annual and 6-monthly financial statements. The 6-monthly financial statements are for regulatory purposes and need not be registered unless required under regulations:
maintain at least 1 statutory fund that relates to their life insurance business and is solely for the purpose of meeting the life insurance liabilities.
In key areas the Bill recognises and accommodates supervision of overseas insurers based in New Zealand by the home regulator, subject to such regulation meeting the satisfaction of the Reserve Bank. The Bill allows for co-operation with overseas regulators.
The Bill obliges the Reserve Bank to supervise insurer compliance with the Bill and regulations. In the event of non-compliance, the Bill enables the Reserve Bank to escalate supervision through investigations and ultimately distress management and liquidation.
Some regulations will be new to insurers and a transitional period of 2 to 3 years will follow enactment to facilitate a path to compliance for insurers that are unable to meet licensing requirements at the time of enactment.
Clause 1 relates to the Title.
Clause 2 relates to commencement. In summary, the Bill comes into force as follows:
the preliminary provisions, some transitional provisions, and the regulation-making powers in the Bill will come into force on the day after the date of the Royal assent:
the provisions dealing with the process for obtaining a licence will come into force by Order in Council. This must not be later than 18 months after the date of the Royal assent. These provisions will come into force after insurers have had an adequate opportunity to become familiar with the Bill, after the Bank has had an adequate opportunity to get licence processing systems in place, and after regulations have been made to give effect to some parts of the Bill:
the rest of the Bill comes into force 18 months after the date of the Royal assent. This includes the fundamental requirement to hold a licence if the person is carrying on insurance business in New Zealand, most of the other substantive requirements of the Bill, and the repeal of various enactments.
Clause 3 relates to the purposes of the Bill. The purposes of the Bill are to—
promote the maintenance of a sound and efficient insurance sector; and
promote public confidence in the insurance sector.
Clause 4 relates to the principles that the Bank must take into account when acting under the Bill (for example, recognising the importance of insurance, the need to maintain competition, the need to avoid unnecessary compliance costs, and the desirability of sound governance of insurers).
Clause 5 contains an overview of the Bill.
Clauses 6 to 9 define the main terms used in the Bill, including the meaning of contract of insurance and carrying on insurance business in New Zealand.
The definition of contract of insurance in the Bill is based on the common law. Accordingly, it includes (for example) house and contents insurance, motor vehicle insurance, life insurance, professional indemnity insurance, health insurance, marine insurance, and reinsurance.
The courts have recognised that the concept of insurance is difficult to define with precision (see, for example, Department of Trade and Industry v St Christopher Motorists Association Ltd [1974] 1 All ER 395). The definition in the Bill already specifies a list of specific exclusions. However, to recognise this difficulty and to provide certainty, the Bill allows regulations to declare transactions or matters that are not by way of insurance.
Clause 10 provides for the Bill to apply to friendly societies and credit unions as if they were bodies corporate.
Clause 11 relates to the Bank's functions under this Bill. These include—
issuing licences to insurers; and
undertaking prudential supervision of licensed insurers; and
taking appropriate action in respect of licensed insurers that are in financial or other difficulties.
Clause 12 requires the Bank to have regard to Government policy that relates to the Bank's functions under the Bill.
Clause 13 provides that the Act will bind the Crown.
Clause 14 provides that it is an offence to carry on insurance business in New Zealand without holding a licence issued under the Bill. Clause 15 provides that it is an offence for an unlicensed person to hold itself out as being a licensed insurer.
The penalty for an offence under these clauses is,—
in the case of an individual, imprisonment for a term not exceeding 3 months or a fine not exceeding $200,000 (or both):
in the case of a body corporate, a fine not exceeding $1,000,000.
Clauses 16 to 19 set out the process for obtaining a licence. In summary—
an application for a licence must be made to the Bank. Only bodies corporate can apply for, and hold, a licence:
an applicant must provide a copy of its fit and proper policy to the Bank. A fit and proper policy is a policy for the purpose of ensuring that only a fit and proper person may be appointed to, and continue to hold, office as a director or relevant officer of the insurer. Relevant officers include the chief executive officer, the chief financial officer, and the appointed actuary. An applicant must also provide a certificate that confirms that its directors and relevant officers are fit and proper persons:
an applicant must provide a copy of a risk management programme to the Bank. A risk management programme sets out the procedures that the insurer will use for the effective identification and management of various risks:
an applicant is entitled to be issued with a licence if it satisfies the requirements in clause 18. These include that—
the applicant holds a current financial strength rating (unless the rating requirement does not apply); and
the applicant has the ability to carry on its business or proposed business in a prudent manner (see clause 19); and
the applicant has the ability to comply with subparts 2 and 3, the regulations, and the proposed conditions of licence (if any); and
the fit and proper policy and risk management programme are satisfactory; and
the applicant's incorporation and ownership structure, ownership, governance structure, and financial strength are appropriate; and
in the case of an overseas applicant, the relevant insurance law, regulatory requirements, and prudential supervision of the applicant's home jurisdiction are appropriate; and
the applicant is, or is entitled to be, registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008; and
the applicant has the ability to comply with legislation relating to money laundering and the countering of financing of terrorism (if the applicant is, or will be, a reporting entity under that Act); and
the applicant complies with any other prescribed requirements.
Clauses 20 and 21 provide for conditions of licence, including conditions—
requiring an insurer to maintain a solvency margin in accordance with certain solvency standards that will be issued by the Bank. A life insurer will also be required to maintain a solvency margin in relation to each statutory fund that it is required to maintain under subpart 3; and
relating to carrying on business in a prudent manner; and
requiring a certain amount of the insurer's business to be New Zealand insurance business; and
requiring an insurer that has not yet commenced business in New Zealand to commence business within a certain time; and
requiring the insurer or directors to certify compliance with conditions.
Clause 22 provides that a failure to comply with a condition is an offence with a penalty of a fine not exceeding $500,000.
Clause 23 requires an insurer to report to the Bank a future likely failure to comply with the requirements relating to its solvency margin.
Clause 24 provides for the Bank to notify the applicant of its decision on an application for a licence.
Clauses 25 to 27 require notification to be given to the Bank before a controlling interest in a licensed insurer is acquired or obtained (for example, the insurer becomes a subsidiary) and before the insurer's corporate form is changed (for example, through demutualisation). The Bank must then consider whether it is still satisfied of the licensing matters. If the Bank is not so satisfied, the licence may be cancelled under clause 28 if, despite that fact, the controlling interest is acquired or obtained or the corporate form is changed.
Clauses 28 to 31 provide for the cancellation of a licence. The Bank may cancel a licence if the insurer has no liabilities under any contracts of insurance in respect of insurance business carried on by it in New Zealand and any of the following applies:
the insurer has asked the Bank to cancel its licence:
a controlling interest has been acquired or obtained or the insurer has changed its corporate form in the circumstances referred to in clauses 25 to 27:
the insurer has been deregistered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 and has not been reregistered within 3 months:
the insurer does not or has ceased to carry on insurance business, or the insurer has been wound up or otherwise ceased to exist.
The provisions allow the Bank to direct an insurer to arrange, subject to the Bank’s approval, to assign its liabilities to 1 or more other licensed insurers in order to allow a cancellation to take place. A failure to comply with a direction is an offence with a penalty of a fine not exceeding $500,000.
Clauses 32 and 34 relate to the fit and proper policy that an insurer must have in respect of its directors and relevant officers. The fit and proper policy must—
take into account the matters set out in clause 34 (for example, whether a person has the qualifications and experience reasonably expected for the position, whether a court has made a finding that a person has engaged in serious wrongdoing, and whether a person has at any time been adjudged bankrupt or been convicted of an offence); and
include the processes to be undertaken in assessing whether a person is fit and proper to be appointed to, and hold, a position; and
provide for reassessments.
Clause 33 allows an insurer that is part of a group of insurers to rely on a policy that applies to the group.
Clause 35 requires an insurer to give the Bank a fit and proper certificate if a director or relevant officer is appointed and also if the Bank requires a certificate to be given for a specified director or relevant officer. A fit and proper certificate states that the director or officer is, in accordance with the fit and proper policy, a fit and proper person to hold the position.
Clause 36 allows the Bank to grant an exemption to an overseas insurer from the requirement to provide a fit and proper certificate in relation to new directors. See clause 228, which contains specific provisions relating to exemptions under the Bill.
Clauses 37 to 41 provide a power to the Bank to remove a person as a director or relevant officer if the Bank has reasonable grounds to believe that the person is not a fit and proper person to hold the position. The relevant person may appeal to the High Court against the decision, and appeal again to the Court of Appeal on a point of law.
Clauses 42 to 51 provide that an insurer must obtain the approval of the Bank before—
transferring all or part of the insurer's insurance business to another person (or, in the case of an overseas insurer, transferring all or part of its New Zealand business); or
amalgamating with another person.
In considering a request for approval, the Bank must have regard to the ability of the transferee, or the amalgamated entity, to comply with subparts 2 and 3, the interests of the policyholders of the insurers that are parties to the proposed transfer or amalgamation, and any other relevant matters.
A failure to comply with the requirement to obtain approval is an offence with a penalty of a fine not exceeding $1,000,000. Under clause 48, a failure to comply with any conditions of an approval is an offence with a penalty of a fine not exceeding $500,000.
The requirement to obtain approval is in addition to any other requirements for the transfer or amalgamation under any other enactment.
Clause 51 provides that an assignment of liabilities under contracts of insurance for the purposes of an approved transfer has effect as if the contracts were transferred by novation.
Clause 52 requires the Bank to publish its policies relating to how it acts, or proposes to act, in relation to licensing matters.
Clauses 53 to 59 allow the Bank to issue solvency standards. A solvency standard is a regulation for the purposes of the Regulations (Disallowance) Act 1989 but not for the purposes of the Acts and Regulations Publication Act 1989. The Bank must make standards available by making copies of them available for inspection at the head office of the Bank and on its Internet site, and for purchase at all reasonable times and at a reasonable price. This is considered more appropriate than publication in the Statutory Regulations series (the SR series), given that the standards contain highly technical and complex matters relevant to insurers, rather than obligations that are of general application or interest to the public. Publication of the standards on the Bank's Internet site, in particular, will ensure that the standards are readily available to all persons that are affected by the standards and to the public.
The Bank must consult with persons that will be substantially affected by the solvency standards before they are issued.
Solvency standards may prescribe—
matters relating to the solvency margin or margins that an insurer must maintain:
requirements relating to reports about the financial condition of insurers. This may involve, for example, requiring an insurer to provide to the Bank a report relating to its financial condition as at its balance date that is prepared by its actuary:
methods for valuing or estimating the assets and liabilities of an insurer:
the assets of an insurer that must be disregarded for the purposes of valuing or estimating the assets of an insurer:
any other matters relating to the assessment, or disclosure, of matters relating to an insurer's financial condition:
matters relating to actuarial reviews.
Clause 58 allows solvency standards to incorporate by reference such matters as technical standards, requirements, or practices of international or national organisations. Schedule 1 sets out some requirements relating to this material.
Clause 60 allows the Bank to exempt an overseas insurer from compliance with certain solvency standard requirements if the Bank is satisfied that the insurer is required to comply with equivalent overseas standards or requirements and the prudential supervision in respect of those overseas standards or requirements is satisfactory. See clause 228, which contains specific provisions relating to exemptions under the Bill.
Clauses 61 to 71 require most insurers to have a current financial strength rating that is given by a rating agency approved by the Bank under clause 62. The requirement does not apply to—
friendly societies or credit unions with an annual gross premium income less than an amount to be prescribed by regulations; or
insurers that exclusively carry on reinsurance business; or
captive insurers.
Clause 63 requires an insurer to notify the Bank of a change in its rating or of a credit watch warning.
Clause 64 requires insurers to disclose the rating to policyholders before entering into or renewing contracts of insurance. Under clause 65, if an insurer is not required to have a rating, the insurer must instead disclose this fact and the reason why it is not required to have a rating.
Clause 66 provides that a failure to comply with these disclosure obligations allows a policyholder to cancel the contract within 20 working days after entering into or renewing the contract.
Clause 67 requires disclosure of an insurer's rating on the insurer's Internet site.
Clause 68 requires advertisements that refer to the rating to also disclose certain other information relating to the rating.
Clause 69 requires an insurer to disclose a downgrading in its rating to policyholders under contracts of insurance that have a duration of more than 1 year.
Clause 70 prohibits an insurer from disclosing to policyholders, or advertising, ratings given by agencies that are not approved by the Bank.
Clause 71 provides that an insurer commits an offence if it fails to comply with any of clauses 63 to 70 and is liable to a fine not exceeding $500,000.
Clause 72 requires overseas insurers to disclose, in the manner prescribed in regulations, the nature and the extent of any overseas policyholder preference that may apply. An overseas policyholder preference is an overseas law or regulatory requirement that—
relates to the recognition and priorities of claims of creditors in the event of the insurer's insolvency; and
has the effect of being materially disadvantageous to New Zealand policyholders as compared to policyholders in the insurer's home jurisdiction.
Clauses 73 to 75 require insurers to have a risk management programme. The programme must—
set out the procedures that the insurer will use for the effective identification and management of various risks (for example, insurance risk and credit risk); and
describe the steps that the insurer will take to ensure that the programme remains current; and
be appropriate to the operations of the insurer.
The Bank will check that the programme complies with the various requirements before issuing a licence.
Clause 76 requires an insurer to have an appointed actuary. The actuary must be a fit and proper person under its fit and proper policy and a Fellow of the New Zealand Society of Actuaries Incorporated (or the holder of an equivalent qualification).
Clauses 77 to 79 require an insurer to ensure that the actuarial information in, or used in the preparation of, its financial statements is reviewed by its actuary. The actuary must give an opinion as to whether the statements comply with the solvency standards in respect of the actuarial information and whether the insurer is complying with its solvency margin obligations.
Clause 80 provides for the appointed actuary and other actuaries who are acting under the Bill to have access to information and explanations required to perform their duties as an actuary.
Clause 81 requires an insurer to—
send to the Bank financial statements and group financial statements prepared under the Financial Reporting Act 1993. The definition of issuer in the Financial Reporting Act 1993 has been amended in Schedule 3 to include all licensed insurers (with the effect that insurers will be required to comply with the preparation, audit, and registration requirements of an issuer under that Act); and
prepare half-yearly interim financial statements and send these to the Bank within 5 months of the end of the first half of each accounting period.
Clause 82 provides that a life insurer must have at least 1 statutory fund in respect of its life insurance business. A statutory fund is a fund that—
is established in the records of a life insurer; and
relates solely to the life insurance business of the life insurer or a particular part of that business.
Clause 83 contains an overview of the subpart.
Clause 84 defines the term life policy for the purposes of the Bill.
Clause 85 deals with contracts of insurance that contain both life insurance and other insurance. If the contract predominately relates to life insurance (that is, less than 25% of the premium relates to non-life insurance), the contract as a whole must be treated as a life policy. If the contract predominately relates to non-life insurance (that is, less than 25% of the premium relates to life insurance), the contract as a whole must be treated as a non-life contract. In other cases, the contract must be treated as 2 separate contracts (one being a life policy and the other being a non-life contract of insurance).
Clause 86 defines various other terms used in the subpart.
Clause 87 provides that in the investment, administration, and management of the assets of a statutory fund, a life insurer must comply with the subpart and give priority to the interests of policyholders of life policies referable to the fund.
Clause 88 requires a life insurer to notify the Bank when a statutory fund is established.
Clause 89 specifies what the assets of a statutory fund are at a particular time (for example, investments relating to the business of the fund).
Clause 90 requires a policy document to specify the statutory fund or funds to which the life policy is referable.
Clause 91 requires various amounts in respect of the business of the statutory fund to be credited to the fund (for example, premiums payable under life policies referable to the fund and income from the investment of the assets of the fund).
Clause 92 allows a life insurer to make a capital payment to a statutory fund.
Clause 93 provides that the assets of the statutory fund are only available for expenditure relating to the business of the fund (for example, to meet liabilities (including policy liabilities) or expenses incurred for the purposes of the business of the fund).
Clause 94 prohibits reinsurance between statutory funds.
Clauses 95 and 96 deal with the consequences of a transaction entered into in contravention of clause 93. Generally, the transaction is of no effect (unless the High Court declares that it is effective). However, if the transaction is included in a class that is specified by regulations, the transaction will not be ineffective (unless the High Court declares that it is of no effect).
Clause 97 contains a limit on investment performance guarantees.
Clause 98 relates to the investment of statutory funds. A life insurer may invest the assets in any way that is likely to further the business of the statutory fund subject to certain qualifications (for example, restrictions on investing the assets in associated persons of the insurer).
Clause 99 requires a life insurer to maintain records of its investment of the assets of a statutory fund in its related parties.
Clause 100 contains restrictions on the transfer of assets between statutory funds.
Clause 101 contains a restriction on the restructure or termination of a statutory fund.
Clause 102 allows regulations to be made for the purpose of specifying what constitutes the income and outgoings of a statutory fund.
Clause 103 imposes a duty on the directors of a life insurer to take reasonable care, and use due diligence, to see that, in the investment, administration, and management of the assets of the fund, the life insurer complies with this subpart and gives priority to the interests of policyholders of life policies referable to the fund. A director that fails to comply with the duty can be liable for any resulting loss.
Clauses 104 to 106 allow the Bank to give a written notice requiring a life insurer to take specified action to remedy a failure to comply with the subpart. The directors of the insurer may be liable for any resulting loss if the insurer fails to comply with the notice. The Bank is given the power to sue in the name of the life insurer to recover the amounts that a director is liable to pay.
Clauses 107 and 108 provide for the restructure and termination of statutory funds with the approval of the Bank.
Clause 109 contains requirements relating to when a life policy that is referable to a statutory fund becomes referable to another statutory fund or when a policy that is referable to 1 statutory fund becomes referable to a further statutory fund or funds.
Clauses 110 to 113—
require an insurer to allocate the operating profit or loss of a category of business of the fund in the manner prescribed by regulations:
contain requirements relating to the allocation of capital payments made to a statutory fund:
require an insurer to distribute retained profits and shareholders' and members' capital in the manner prescribed by regulations.
The main object of these provisions is to ensure that profits and losses are dealt with in a manner that protects the interests of policyholders and is consistent with prudent management of the fund.
Clause 114 applies to a liquidation or other winding up of a life insurer. After discharging various liquidation fees and expenses, the assets of a statutory fund are to be applied—
first in discharge of the policy liabilities of the insurer referable to the fund:
then in discharge of other liabilities that are referable to the business of the fund:
then as the High Court directs.
Clause 115 provides that if a life insurer contravenes this subpart and the contravention causes a loss to a statutory fund and the insurer is in liquidation, the directors are liable for the loss.
Clause 116 provides that a life insurer commits an offence if it fails to comply with this subpart and is liable to a fine not exceeding $500,000.
Clause 117 allows the Bank to exempt an overseas insurer from compliance with this subpart if it is required to comply with statutory-fund-type arrangements in its home jurisdiction, there is no overseas policyholder preference in respect of payments out of the fund or arrangement, and the level of prudential supervision is satisfactory. See clause 228, which contains specific provisions relating to exemptions under the Bill.
Clause 118 requires the Bank to undertake prudential supervision of licensed insurers.
Clauses 119 to 122 empower the Bank to require insurers, associated persons of insurers, and certain other persons to supply to the Bank information, data, or forecasts for the purposes of prudential supervision (for example, information about matters relating to the business, operation, or management of the insurer). Under clause 123, the Bank can require the information, data, or forecasts to be audited or reviewed.
Clause 124 empowers the Bank to require an insurer to supply the Bank with a report or reports, prepared by an approved person, on any matters relating to the business, operation, or management of the insurer or an associated person.
Clauses 125 to 127 require auditors and actuaries to disclose to the Bank information relating to the affairs of an insurer or associated person obtained in the course of holding the office of auditor or actuary if—
the insurer or associated person is insolvent or is likely to become insolvent, is in serious financial difficulties, or is or has been operating fraudulently or recklessly; and
the disclosure of that information is likely to assist, or be relevant to, the exercise by the Bank of its powers under the Bill.
Auditors and actuaries are protected from civil, criminal, and disciplinary action arising from the disclosure in good faith of information to the Bank.
Clause 128 empowers the Bank to require the supply of information or data or to appoint an investigator if it has reasonable cause to suspect that—
an insurer is not maintaining a solvency margin (as required by the conditions of its licence and the solvency standards); or
the business of an insurer has not been, or is not being, conducted in a prudent manner; or
an insurer has been or is operating fraudulently or recklessly; or
an insurer or an associated person has failed to comply with any requirement to supply information, data, or forecasts; or
an insurer has failed, or is failing, to comply with any other requirement imposed by or under the Bill or the regulations.
Clause 129 allows an investigator to require the supply of information or data, and to inspect documents, relating to the business, operation, or management of an insurer or associated person.
Clause 130 allows an investigator to enter and search a place for the purposes of an investigation if the occupier consents or the investigator obtains a warrant. Schedule 2 contains various provisions relating to this power.
Clause 131 contains certain offences relating to investigations (for example, hindering, obstructing, or delaying an investigator in the carrying out of an investigation). The penalty, in the case of an individual, is imprisonment for a term not exceeding 3 months or a fine not exceeding $200,000 (or both) and, in the case of a body corporate, is a fine not exceeding $500,000.
Clause 132 relates to proceedings about the lawfulness of the exercise of various investigation powers.
Clauses 133 to 135 contain provisions relating to protecting the confidentiality of information, data, and forecasts supplied or disclosed to, or obtained by, the Bank or an investigator for the purposes of, or in connection with the exercise of powers conferred by, the Bill.
This subpart empowers the Bank to direct an insurer to prepare a recovery plan if it has reasonable grounds to believe that—
the insurer is not maintaining a solvency margin; or
the business of an insurer has not been, or is not being, conducted in a prudent manner; or
an insurer has failed, or is failing, to comply with any other requirement imposed by or under the Bill or the regulations.
The recovery plan must—
set out the actions that the insurer will take to effectively address the matters that caused the Bank to give the direction; and
be provided to the Bank for approval.
After approval, the insurer must take all practicable steps to comply with the plan.
A failure to comply with the various requirements is an offence punishable by a fine not exceeding $500,000.
Clause 141 empowers the Bank to give a direction to an insurer if it has reasonable grounds to believe that—
an insurer is not maintaining a solvency margin; or
the business of an insurer has not been, or is not being, conducted in a prudent manner; or
an insurer, or a director or relevant officer, has failed, or is failing, to comply with any other requirement imposed by or under the Bill or the regulations; or
the governance structure of the insurer has significantly changed since its licence was issued; or
the insurer is an overseas insurer in relation to which an overseas prudential supervisor has taken, or is taking, regulatory action; or
the insurer is an overseas insurer and the overseas law, requirements, or prudential supervision that applies to the insurer has significantly changed since its licence was issued.
Clause 142 provides that the directions may require the insurer to—
consult with the Bank:
cease entering into any new contracts of insurance:
carry on, or cease to carry on, its business, or any part of its business, in accordance with the direction:
take the action that is specified in the direction to address a failure, or potential failure, to comply with any requirement imposed by or under the Bill or the regulations:
ensure that any officer or employee ceases to take part in the management or conduct of its business except with the permission of the Bank:
take specified action to address any financial difficulties.
Clause 143 empowers the Bank to give a direction to an associated person of an insurer if it has reasonable grounds to believe that—
the person, or a director or chief executive officer, has failed, or is failing, to comply with any requirement imposed by or under the Bill or the regulations; or
the circumstances of the person are such as to be prejudicial to the solvency of the insurer or its ability to comply with the Bill or the regulations, or the affairs of the person are being conducted in a manner that is so prejudicial.
Clause 144 provides that the directions may require the associated person to—
consult with the Bank:
take the action that is specified in the direction to address a failure, or potential failure, to comply with any requirement imposed by or under the Bill or the regulations:
ensure that any officer or employee ceases to take part in the management or conduct of its business except with the permission of the Bank:
take specified action to address any financial difficulties.
Clause 145 requires a direction to state the grounds on which it is given.
Clause 146 provides that it is an offence to fail to comply with a direction or, being an officer or employee, to hinder or prevent the insurer or associated person from giving effect to a direction. In the case of an individual, the penalty is imprisonment for a term not exceeding 3 months or a fine not exceeding $200,000 (or both). In the case of a body corporate, the penalty is a fine not exceeding $500,000.
Clause 147 provides that if the circumstances for giving a direction exist, the Bank may—
remove or replace a director, an auditor, or an actuary of an insurer or of an associated person; or
appoint a person as a director, an auditor, or an actuary of an insurer or of an associated person.
Clause 148 provides that it is an offence to disclose that a direction has been given under subpart 1 or this subpart or that a notice has been given under clause 147. In the case of an individual, the penalty is imprisonment for a term not exceeding 3 months or a fine not exceeding $200,000 (or both). In the case of a body corporate, the penalty is a fine not exceeding $500,000.
Clause 149 empowers the Bank to apply to the High Court for the appointment of a liquidator of—
a licensed insurer (on the grounds that the insurer is unable to pay its debts, the insurer is failing to maintain a solvency margin, the insurer has persistently or seriously failed to comply with any requirement imposed by or under the Bill or the regulations, or that it is just and equitable that the insurer is put into liquidation):
a person that is carrying on insurance business in New Zealand without a licence.
Clause 150 allows the High Court to reduce the value of an insurer's contracts of insurance if it is satisfied that 1 or more of the grounds specified in clause 149 apply.
Clause 151 empowers the Bank to apply to the High Court to put a licensed insurer into voluntary administration (on the ground of failing to maintain a solvency margin or on the grounds specified in section 239L of the Companies Act 1993).
Clause 152 provides that the Bank's approval is required before a licensed insurer—
is put into liquidation pursuant to a special resolution of its shareholders or by the insurer's board:
is put into voluntary administration by the insurer's board.
Clause 153 allows the Bank to—
make certain applications to the High Court in respect of insurers that are in voluntary administration, subject to a deed of company arrangement, or in liquidation (for example, applications to the court relating to the supervision of the administrator, deed administrator, or liquidator):
appear and be heard in relation to High Court applications made by other persons (for example, applications to appoint a liquidator or an administrator for an insurer).
Clause 154 provides for the Bank to appear and be heard in respect of High Court applications relating to arrangements, amalgamations, and compromises under the Companies Act 1993.
Clause 155 provides for the Bank to be sent copies of High Court applications made under Parts 14 to 16 of the Companies Act 1993 in respect of licensed insurers. (Parts 14 to 16 relate to compromises with creditors, the approval of arrangements, amalgamations, and compromises by the High Court, voluntary administration, and liquidations.)
Clause 156 provides that the Bank must be sent copies of certain documents prepared under the Companies Act 1993 in respect of a licensed insurer that is in voluntary administration, subject to a deed of company arrangement, or in liquidation (for example, an administrator's report of misconduct, notice of the termination of a deed of company arrangement, and the accounts of an administrator or a liquidator).
Clause 157 provides for the attendance of a representative of the Bank at certain meetings for a licensed insurer that is in voluntary administration, subject to a deed of company arrangement, or in liquidation.
Clause 158 allows the Bank to require the liquidator of a licensed insurer to call a meeting of creditors or shareholders to vote on a proposal that a liquidation committee be appointed to act with the liquidator.
Clause 159 provides for the High Court to reduce the value of a licensed insurer's contracts of insurance if an application has been made—
to appoint a liquidator or an administrator for the insurer; or
by a liquidator or an administrator of the insurer.
Clause 160 allows the High Court to require an actuarial report to be prepared for the purposes of clause 159.
Clause 161 requires the liquidator of a life insurer to carry on its business so far as it consists of continuing the insurer’s life policies with a view to that part of the business being transferred as a going concern to another insurer.
Clauses 162 to 165 provide for the liquidator or deed administrator of a licensed insurer to apply to the High Court for the approval of a scheme under which all or part of the insurer's insurance business is transferred to another person. If the scheme is approved, it becomes binding on all persons.
Clause 166 allows the Bank to apply to the High Court for the court to give directions to the liquidator, administrator, or deed administrator of a licensed insurer.
Clause 167 requires a liquidator of an insurer, and permits a deed administrator of an insurer, to value the liability of the insurer to each policyholder under its contracts of insurance. The amount of the liability of the insurer, as determined by the liquidator or deed administrator, is binding on a policyholder unless the policyholder appeals to the High Court against the determination.
Clauses 168 to 172 provide that the Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank,—
declare that an insurer is subject to statutory management; and
declare that an associated person of an insurer is subject to statutory management.
Generally, every subsidiary of an insurer declared to be subject to statutory management is also subject to statutory management.
Under clause 171, the Bank may make a recommendation in relation to an insurer only if it is satisfied on reasonable grounds—
that the failure of the insurer may cause significant damage to the financial system or the economy and that 1 or more of the following apply:
the insurer is not maintaining a solvency margin:
the business of the insurer has not been, or is not being, conducted in a prudent manner:
the insurer, or a director or relevant officer, has failed, or is failing, to comply with any other requirement imposed by or under the Bill or the regulations:
the governance structure of the insurer has significantly changed since its licence was issued:
the insurer is an overseas insurer in relation to which an overseas prudential supervisor has taken, or is taking, regulatory action:
the insurer is an overseas insurer and the overseas law, requirements, or prudential supervision that applies to the insurer has significantly changed since its licence was issued; or
that the insurer is, or may be, operating fraudulently or recklessly, and that it is desirable that the insurer be declared to be subject to statutory management.
Under clause 172, the Bank may make a recommendation in respect of an associated person of an insurer if it is satisfied on reasonable grounds that—
the person, or a director or chief executive officer, has failed, or is failing, to comply with any requirement imposed by or under the Bill or the regulations; or
the circumstances of the person are such as to be prejudicial to the solvency of the insurer or its ability to comply with the Bill or the regulations, or the affairs of the person are being conducted in a manner that is so prejudicial; or
the business and affairs of the insurer are so closely connected with the associated person that the statutory manager would be unable to exercise effectively the powers conferred by this subpart in relation to the insurer unless the statutory manager is appointed as statutory manager of the associated person; or
the associated person is, or may be, operating fraudulently or recklessly in a manner prejudicial to the solvency of the insurer or its ability to comply with the Bill or the regulations, and that it is desirable that the person be declared to be subject to statutory management.
However, the Bank must not make a recommendation in respect of an insurer or associated person unless it is satisfied on reasonable grounds that the public interest, the financial system or economy of New Zealand, or the relevant policyholders cannot be adequately protected under the other provisions of the Bill or under the Companies Act 1993.
Clause 173 requires the Bank to give notice of its recommendation.
Clause 174 relates to the application of this subpart to joint statutory managers, associated persons, and subsidiaries.
Clause 175 provides for the continuation of statutory management of companies that have been restored to the New Zealand register under the Companies Act 1993.
Clauses 176 and 177 provide that the statutory manager must,—
in exercising the powers conferred by this subpart, have regard to the purposes of the Bill, the relevant principles set out in the Bill, and the Bank's advice; and
consult with the Bank and provide the reports that the Bank may require; and
comply with the Bank's directions.
Clause 178 provides that various statutory management provisions in the Corporations (Investigation and Management) Act 1989 apply for the purposes of this subpart.
Clause 179 provides that this Bill does not limit the Corporations (Investigation and Management) Act 1989. Therefore, insurers can still be investigated, declared to be subject to statutory management, or declared to be at risk under that Act.
Clause 180 provides that a statutory manager has certain powers conferred on a liquidator under the Companies Act 1993 to obtain documents or information.
Clause 181 requires a statutory manager to obtain the Bank's approval before selling certain assets (for example, the business of the insurer or a substantial part of it).
Clause 182 provides that if the Bank has approved a sale, further permission or consent under any enactment or agreement is not required.
Clauses 183 to 186 relate to overseas licensed insurers. Under the provisions, the Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank, declare that the whole or any part of the overseas insurer's New Zealand business will vest in a company formed by the statutory manager.
Clause 187 provides that—
the statutory manager does not incur personal liability for any obligations incurred in the course of his or her duties:
in the liquidation of a person in statutory management, all amounts required to satisfy obligations incurred by the statutory manager must be paid in priority to all other debts.
Clause 188 permits a statutory manager to value the liability of the insurer to each policyholder under its contracts of insurance. The amount of the liability of the insurer, as determined by the manager, is binding on each policyholder.
Clause 189 provides for the value of contracts of insurance to be reduced by Order in Council.
Clauses 190 to 192 provide for the statutory manager to appoint and remove an auditor and an actuary.
Clauses 193 and 194 relate to the statutory manager preparing financial statements and annual reports.
Clauses 195 to 197 provide for the termination of statutory management by Order in Council or on the appointment of a liquidator.
Clauses 198 to 208 contain special provisions relating to Lloyd's (being a society of that name incorporated by the Imperial Act known as the Lloyd's Act 1871). In the case of Lloyd's, insurance is underwritten by its individual members.
These provisions allow Lloyd's to apply for a licence on behalf of all of its members. Lloyd's underwriters must not carry on insurance business in New Zealand unless Lloyd's obtains a licence.
If a licence is issued, its members—
may carry on insurance business in New Zealand and are each treated as being a licensed insurer:
must comply with the conditions of the licence, the Lloyd's fit and proper policy, and the Lloyd's risk management programme.
Under clause 205, the Bank may direct Lloyd's underwriters to cease entering into, or renewing, contracts of insurance if the Bank has reasonable grounds to believe that there has been a substantial change in the United Kingdom legislation that applies to Lloyd's or in the prudential supervision that applies to Lloyd's in the United Kingdom.
The various requirements of the Bill (for example, those relating to fit and proper requirements and risk management programmes) are modified to fit the particular circumstances of Lloyd's.
Clauses 209 and 210 provide for the Bank to authorise an overseas prudential supervisor to do the following for the purposes of its supervisory functions:
conduct an inspection of any overseas licensed insurer:
require any overseas licensed insurer to supply information, data, or forecasts.
Clause 211 provides for an offence of making false or misleading declarations or representations for any purpose relating to the Bill. In the case of an individual, the penalty is a fine not exceeding $200,000. In the case of a body corporate, the penalty is a fine not exceeding $500,000.
Clause 212 provides that a director of a body corporate that is convicted of an offence may also be guilty of an offence if—
the offence took place with his or her authority, permission, or consent; or
he or she knew, or could reasonably be expected to have known, that the offence was to be or was being committed and failed to take reasonable steps to prevent or stop it.
Clause 213 provides that in any prosecution under this Bill, it is a defence if the person proves that—
the failure to comply with the Bill was because of the act or omission of another person, or some other cause beyond the person's control; and
the person took reasonable precautions and exercised due diligence to avoid the failure.
Clauses 214 and 215—
prohibit New Zealand persons and overseas companies from falsely holding out overseas that they are regulated by New Zealand law:
prohibit persons that do not carry on insurance business from using certain words (such as “insurance”
) in their names.
Clause 216 provides that the prohibition does not apply in certain circumstances (for example, insurance intermediaries and insurance industry associations).
Clause 217 provides that if an insurer is a subsidiary, its constitution must not permit a director of the insurer to act in the best interests of the insurer's holding entity rather than in the best interests of the insurer.
Clauses 218 to 224 provide a power to a District Court to ban a person from participating in insurance business (for example, being a director, manager, shareholder, or employee of an insurer) if the person—
has, in connection with an insurance business, engaged in conduct that constitutes serious wrongdoing and the person is not a fit and proper person to participate in insurance business; or
as a director of an insurer, has persistently or seriously failed to comply with the Bill or the regulations; or
is a director of an insurer, being an insurer that has persistently or seriously failed to comply with the Bill or the regulations, and the person has persistently failed to take reasonable steps to prevent or stop that failure; or
is prohibited under overseas law from participating in an insurance business.
A person against whom a banning order is made may appeal to the High Court. There may be a further appeal to the Court of Appeal on a question of law.
The Bank is required to keep a public register of banned persons.
It is an offence to participate in insurance business in breach of a banning order. In the case of an individual, the penalty is imprisonment for a term not exceeding 3 months or a fine not exceeding $200,000 (or both). In the case of a body corporate, the penalty is a fine not exceeding $1,000,000.
Clause 225 provides for the notice and service of documents under the Bill.
Clause 226 protects the Bank, statutory managers, officers and employees and directors of the Bank, and investigators from being liable for acts or omissions done or omitted to be done under the Bill in good faith.
Clause 227 provides a Crown indemnity to the Bank and the persons referred to in clause 226.
Clause 228 contains general provisions relating to exemptions. The provision requires the Bank to make exemptions available at its head office and on its Internet site and for purchase at a reasonable price.
The clause clarifies that the exemptions are not regulations for the purposes of the Regulations (Disallowance) Act 1989 and the Acts and Regulations Publication Act 1989. The exemptions are administrative in character (rather than legislative). The Bank can only give exemptions to individual insurers or persons (rather than a class) and the exemptions may be given only on the application of specific criteria specified in the Bill (including the purposes and principles in clauses 3 and 4). The exemptions are limited to specific obligations and in most cases the exemptions relate only to overseas insurers that are subject to equivalent obligations, and equivalent supervision, in their home jurisdiction. The exemptions are not of general application or interest to the public and, accordingly, publication on the Bank's Internet site is more appropriate than publication in the SR series.
Clause 229 relates to regulations that may be made for the purposes of the Bill.
Clauses 230 and 231 repeal—
Parts 1 and 1A, sections 78 to 79A, and related Schedules of the Life Insurance Act 1908:
Insurance Companies' Deposits Act 1953:
Insurance Companies (Ratings and Inspections) Act 1994:
Mutual Insurance Act 1955.
Clause 232 relates to amendments to other enactments.
Clauses 233 to 237 allow the Bank to issue provisional licences to insurers that are carrying on business before commencement. There are 2 types of provisional licence—
a provisional licence that is issued to an insurer pending the consideration of its application for a full licence. The licence must be issued provided that the insurer has taken reasonable steps to make a proper application:
a provisional licence for insurers that intend to leave the market.
A provisional licence remains in force for up to 3 years (but ceases to be in force earlier if, for example, a full licence is issued or the insurer ceases to carry on insurance business in New Zealand).
While the provisional licence is in force, the insurer is required to comply with certain requirements imposed under the Bill only to the extent required by the conditions of the licence. However, the conditions will require a provisional licence holder to take steps to bring the licence holder into full compliance with the requirements of the Bill as soon as is practicable (unless the insurer intends to leave the market).
Clauses 238 and 239 provide for Public Trust to return the deposits that have been made by insurers under the Insurance Companies' Deposits Act 1953 or the Life Insurance Act 1908 when a full licence has been issued (such that the insurer is fully subject to the new prudential supervision system under the Bill).
This regulatory impact statement is a short executive summary that builds upon more comprehensive regulatory impact statements that accompanied Cabinet papers approved in December 2007 and May 2008. The following links access the full text of those documents:
http://www.rbnz.govt.nz/finstab/nbdt/insurance/3197254.pdf:
http://www.rbnz.govt.nz/finstab/nbdt/insurance/3400502.pdf.
Copies of those regulatory impact statements are also available on The Treasury’s website at: http://www.treasury.govt.nz/publications/informationreleases/ris.
Insurance provides financial protection for private individuals, businesses, and other entities against risks that can have catastrophic impacts for the people concerned if they are not protected. The financial stability of the insurers that provide this protection is central to a sound insurance sector. Due to information complexities that are especially material, consumers are poorly placed to monitor the financial strength of insurers, both on their own and collectively.
New Zealand does not have a framework for the prudential regulation and supervision of insurers. Current insurance legislation is outdated and inconsistent in its application across the diversity of the New Zealand insurance market. Although the New Zealand insurance sector is not generally in distress, recent global events have demonstrated the vulnerability of the financial sector as a whole.
The Bill will deliver an effective framework of prudential regulation and supervision appropriate to the New Zealand insurance sector. The approach will be generally aligned to internationally accepted insurance regulatory practice and will recognise the diversity of the New Zealand insurance market.
The overall regulatory approach has been the subject of extensive public consultation in bringing it to this point.
The main areas of regulation covered by the Bill, and associated benefits, are as follows:
licensing ensures a consistent set of minimum standards is met by all insurers. The standards must be obtained to receive a licence and once a licence is granted an insurer is able to be monitored against those standards. This reduces the need for consumers to make complex inquiries regarding an insurer’s financial strength and other indicators:
risk management places responsibility on insurers to fully identify key risks associated with their businesses and to prepare a risk management programme that adequately addresses these risks. The Bill provides the areas the programme should cover but leaves it to insurers to formulate the detail and implementation of the plan:
guided by standards detailed in the Bill, insurers will be required to consider the qualifications, background, and experience of key personnel and to consider any matters indicating unsuitability for designated roles:
the Reserve Bank may remove persons from designated roles when fit and proper requirements have not been met:
the Reserve Bank’s role in reviewing and approving programmes ensures that minimum standards can be attained across the industry:
the combination of enhanced fit and proper assessment by insurers and powers to remove held by the Reserve Bank limit the possibility of unsuitable people holding positions of influence in insurers:
statutory fund separation strengthens and mandates universal application of a protection already in place for some life insurance policyholders and includes other long-term insurances, which share the long-term liability profile of life insurance, within the statutory fund regime:
clear rules are provided for in the legislation allowing insurers to implement the requirements without significant structural changes:
appropriate standards encourage insurers to maintain strong financial positions, and financial information and solvency assessments are reported consistently across different insurers:
financial information is made available to the Reserve Bank and potentially to the public (those who value it) for monitoring insurers and comparing insurer financial performance:
credit ratings provide the public and the Reserve Bank with an independent and straightforward indication of insurer strength consistently applied across the whole sector. A rating provides a simple metric that consumers can substitute for the detailed examination of financial accounts:
consistent regulatory discipline replaces the limitations of inconsistent market discipline:
the Bank has a range of powers to take remedial action in the event of insurer distress or failure, thus assisting in the protection of the policyholder position.
The new insurance prudential supervision regime will inevitably generate transitional and ongoing compliance costs that are associated with the introduction of any new regulatory regime into a largely unregulated industry. However, the overall marginal cost to industry of the regime is mitigated by its relatively light-handed and comparatively non-prescriptive approach, plus the fact that foreign-owned insurers operating in New Zealand are already subject to a degree of regulation by their home country supervisors. The new costs will be largely incurred at the transition to the new regime. The steady state is not expected to materially increase compliance costs over the status quo for insurers that comply with the regulations.
The regime has generally been designed around a self-managing approach. For instance, insurers are expected to devise and adhere to their own fit and proper and risk management policies, subject to Bank oversight. Rules for solvency and statutory funds are clearly laid out in the law for insurers to follow. Alternative approaches, such as prescribed risk management procedures or pre-approval by the Bank of all director appointments, have been rejected. For compliant insurers, ongoing contact with the Bank is expected to be minimal.
The detailed costs and risks of the regulatory regime are set out as follows:
insurers will incur a cost in applying to be licensed under the regime. This includes the cost of familiarisation with the new regulatory requirements, self-assessment against the regime, preparing an application, dealing with the Bank as supervisor, and making any organisational and business changes needed to qualify for a licence:
the proposed regulatory and supervisory requirements will impose additional compliance costs on insurers, including the need to maintain structures to verify compliance with requirements, to maintain capital in line with minimum standards, and to report regularly to the Bank. These costs are not expected to be significant relative to insurers’ revenue and profits and are not likely to affect the ability of insurers to continue to provide insurance services at current levels, although the impact on small insurers may be proportionately greater than for large insurers. Once insurers are licensed, these costs are likely to be routine costs of doing business, and not to represent a material increase in costs over the status quo:
compliance with capital adequacy and solvency requirements may place constraints on insurers’ business operations to some degree. These requirements and the associated costs are generally aligned to internationally accepted prudent practice for the insurance industry:
the regulatory reporting and public disclosure requirements will impose some additional costs on insurers beyond existing levels, but these are not expected to be significant relative to insurer revenue and existing public reporting requirements. The costs will be higher for those insurers that do not currently have to comply with the Financial Reporting Act 1993:
the proposed mandatory requirement for insurers to have a financial strength rating will impose additional costs on those insurers that are not currently rated. Ratings are already mandatory for most general insurers and a number of other insurers have voluntary financial strength ratings. The annual cost to insurers of having a rating is expected to be in the range of $30,000 to $40,000. There will be indirect costs associated with ratings, such as management time and the provision of information. In some cases, the costs of ratings will be absorbed by insurance providers, while in other cases some or all of the costs might be passed on to policyholders. In order to minimise costs for those who can least afford it, the Bill proposes an exemption for certain very small insurers with annual gross premium below a prescribed threshold:
the mandatory ratings requirement and its associated disclosure requirement could place commercial pressure on some insurers and lead to some insurers merging with others or leaving the sector. This is not considered a negative outcome since highlighting relative financial strength will encourage a more soundly managed insurance sector:
the Bank has the power to require information from insurers, which the Bank can require to be audited, at the insurer’s expense. There will be costs incurred by insurers, on a case-by-case basis, who breach regulatory requirements. In both cases, the Bank will adopt a risk-based approach to supervision, meaning only non-compliant or at-risk insurers will face the specific costs.
Licensing requirements may represent a barrier to entry for potential new market participants.
Increased supervision may reduce market discipline on insurers and increase moral hazard.
The fiscal costs for the Reserve Bank associated with the insurance proposals are estimated to be in the range of $2.5 million to $4 million per annum on an ongoing basis, once the prudential regulation proposals for insurance have been fully implemented. This funding will be obtained through the Bank’s funding agreement.
The Bank will not be charging a licensing fee nor fees for the exercise of its regulatory functions during the first 3 years after the Bill's enactment.
It is considered that the benefits of the proposals contained within the regulatory regime outweigh the costs.
Hon Simon William English
Government Bill
95—1
17 Applicant must provide fit and proper policy, fit and proper certificate, and risk management programme
23 Licensed insurer must report likely failure to comply with solvency margin imposed under licence conditions
25 Bank must be notified before controlling interest is acquired or obtained and before corporate form is changed
35 Licensed insurer must provide fit and proper certificate for new directors or relevant officers or if Bank requires certificate
69 Licensed insurer must disclose downgrading in rating to policyholders under contracts of insurance with duration of more than 1 year
Disclosure of overseas policyholder preference
Appointment of actuary and actuarial review
Supply of financial statements
Duties and liabilities of directors, etc
Restructure and termination of statutory funds
Additional requirements for transfer of life policies between statutory funds by endorsement
Allocation of profits and losses and of capital payments and distribution of profits and capital
110 Life insurer must allocate operating profits and losses in accordance with prescribed requirements
Application of statutory fund assets on liquidation or winding up
Liability of directors for loss to statutory fund
Bank to undertake prudential supervision
Bank's approval for voluntary liquidation or appointment of administrator by company
Bank's participation in insolvency procedures and certain other proceedings
153 Bank may make certain applications in respect of voluntary administration or liquidation and appear and be heard in proceedings
157 Attendance of representative of Bank at certain meetings for insurer in voluntary administration, subject to deed of company arrangement, or in liquidation
Special insolvency provisions for insurers
162 Liquidator or deed administrator may apply to High Court for approval of scheme of transfer of insurance business
Commencement of statutory management
Application of Corporations (Investigation and Management) Act 1989
Power to obtain documents and information
Body corporate may be formed to acquire branch of overseas person
Obligations incurred by statutory manager
Value of contracts of insurance
Auditor, actuary, and annual financial statements and records
Termination of statutory management
Provisions relating to Lloyd's
198 Lloyd's underwriters must not carry on insurance business in New Zealand unless Lloyd's holds licence
208 Act does not authorise Lloyd’s underwriter to carry on any business underwriter could not otherwise have carried on
Access to information by overseas supervisor
Prohibition against falsely holding out New Zealand connection
Restriction on insurer's constitution
217 Insurer's constitution must not permit directors to act in holding entity's best interests even though it is not in insurer's best interests
Protection from liability and indemnity
General provisions relating to exemptions
Repeals and consequential amendments
236 Provisional licence holder only required to comply with requirements to extent required by conditions
The Parliament of New Zealand enacts as follows:
This Act is the Insurance (Prudential Supervision) Act 2009.
(1) Section 1, this section, Part 1, sections 42 to 59, 102, 199 to 208, 211 to 213, 225 to 229, 232(1), and 233 to 239, Schedule 1, and Part 1 of Schedule 3 come into force on the day after the date on which this Act receives the Royal assent.
(2) Sections 16 to 31, 60, and 117 come into force on the earlier of the following:
(a) the day that is 18 months after the date on which this Act receives the Royal assent:
(b) a date appointed by the Governor-General by Order in Council; and 1 or more orders may be made bringing different provisions into force on different dates.
(3) The rest of this Act comes into force on the day that is 18 months after the date on which this Act receives the Royal assent.
(1) The purposes of this Act are to—
(a) promote the maintenance of a sound and efficient insurance sector; and
(b) promote public confidence in the insurance sector.
(2) Those purposes are achieved by—
(a) establishing a system for licensing insurers; and
(b) imposing prudential requirements on insurers; and
(c) providing for the supervision by the Reserve Bank of New Zealand (the Bank) of compliance with those requirements; and
(d) conferring certain powers on the Bank to act in respect of insurers in financial distress or other difficulties.
In achieving the purposes of this Act, the Bank must take into account the following principles that are relevant to the performance of functions or duties imposed, or the exercise of powers conferred, on the Bank by this Act:
(a) the importance of insurance to members of the public in terms of their personal or business risk management:
(b) the importance of maintaining the sustainability of the New Zealand insurance market:
(c) the importance of dealing with an insurer in financial distress or other difficulties in a manner that aims to—
(i) adequately protect the interests of its policyholders and the public interest; and
(ii) ensure that any failure, or possible failure, of the insurer does not have the potential to significantly damage the financial system or the economy of New Zealand:
(d) the importance of recognising—
(i) that it is not a purpose of this Act to eliminate all risk of insurer failure; and
(ii) that members of the public are responsible for their own decisions relating to insurance:
(e) the desirability of providing to the public adequate information to enable members of the public to make those decisions:
(f) the desirability of consistency in the treatment of similar institutions (while recognising that the New Zealand insurance market comprises a diversity of institutions):
(g) the need to maintain competition within the insurance sector:
(h) the need to avoid unnecessary compliance costs:
(i) the desirability of sound governance of insurers:
(j) the desirability of effective risk management by insurers.
(1) In this Act,—
(a) this Part deals with preliminary matters, including purposes, principles, interpretation, the Bank's functions under this Act, and the application of this Act to the Crown:
(b) Part 2 contains provisions relating to the licensing and prudential regulation of insurers:
(c) Part 3 contains provisions relating to the prudential supervision of insurers:
(d) Part 4 contains provisions relating to distress management, including provisions relating to recovery plans, directions, liquidation or voluntary administration of insurers, and statutory management:
(e) Part 5 contains miscellaneous provisions, including provisions relating to Lloyd's, offences, banning orders, regulations, consequential amendments, and transitional arrangements.
(2) This section is only a guide to the general scheme and effect of this Act.
(1) In this Act, unless the context otherwise requires,—
accounting period, in relation to an insurer, means a year ending on a balance date of the insurer and, if, as a result of the date of the formation or incorporation of the insurer or a change of the balance date of the insurer, the period ending on that date is longer or shorter than a year, that longer or shorter period is an accounting period
actuary means a person who is—
(a) a Fellow of the New Zealand Society of Actuaries Incorporated; or
(b) the holder of an equivalent professional qualification approved by the Bank by notice to an insurer
administrator means an administrator under Part 15A of the Companies Act 1993
applicant means a body corporate that has applied for a licence
appointed actuary, in relation to an insurer,—
(a) means a person holding an appointment by the insurer under section 76(1); and
(b) includes a person holding an appointment by the insurer under section 76(2) that is acting because the person appointed under section 76(1) is unable to act; and
(c) includes a person appointed as an actuary by the Bank under section 147; and
(d) includes a person appointed as an actuary by a statutory manager under section 190
approved rating agency means a rating agency approved by the Bank under section 62
associated person has the meaning set out in section 9(2)
Bank means the Reserve Bank of New Zealand constituted under the Reserve Bank of New Zealand Act 1989
Bank's Internet site means an Internet site maintained by, or on behalf of, the Bank
captive insurer means an insurer that—
(a) is a subsidiary of an entity that is not an insurer (the parent); and
(b) only insures risks of the parent or of other subsidiaries of the parent (or both)
carries on insurance business in New Zealand has the meaning set out in section 8
chief executive officer means a person occupying the position of chief executive officer by whatever name called
chief financial officer means a person occupying the position of chief financial officer by whatever name called
condition,—
(a) in relation to a licensed insurer, means any condition of its licence; and
(b) in relation to a Lloyd's underwriter, means any condition of the licence issued to Lloyd's under section 202
contract of insurance has the meaning set out in section 7
current financial strength rating means a financial strength rating that, in relation to a date on which an insurer is required to have a rating, was given not earlier than 1 year before that date
deed administrator has the same meaning as in section 239B of the Companies Act 1993
deed of company arrangement has the same meaning as in section 239B of the Companies Act 1993
direction means any direction given by the Bank under this Act or the regulations
director means—
(a) a person occupying the position of director by whatever name called:
(b) in the case of an entity that does not have directors as such, any trustee, manager, or other person who acts in relation to that entity in the same or a similar fashion as a director would act were that entity a company incorporated in New Zealand under the Companies Act 1993
document has the same meaning as in section 4(1) of the Evidence Act 2006
failing to maintain a solvency margin, in relation to an insurer, means that the insurer is failing to comply with a condition of its licence imposed under section 20(2)(b) or (c)
financial statements has the same meaning as in section 8 of the Financial Reporting Act 1993
financial strength rating,—
(a) in relation to an insurer other than a Lloyd's underwriter, means a rating that indicates the ability of the insurer to meet its liabilities (including liabilities under contracts of insurance) as they fall due:
(b) in relation to a Lloyd's underwriter, means a rating obtained by Lloyd's that applies to the Lloyd's market
governing body means,—
(a) in relation to a body corporate, the board of directors (or other persons or body exercising powers of management, however described) of the body corporate:
(b) in relation to a partnership or other unincorporated body of persons, either—
(i) the board of directors (or other persons or body exercising powers of management, however described) of the partnership or other unincorporated body of persons; or
(ii) if there is no board or other persons or body as described in subparagraph (i), the partners of the partnership or members of the unincorporated body of persons
Governor means the Governor of the Bank appointed under the Reserve Bank of New Zealand Act 1989
group financial statements has the same meaning as in section 9 of the Financial Reporting Act 1993
health insurance means insurance against a liability to pay fees or charges relating to the provision of a health service (within the meaning of section 5(1) of the Health Practitioners Competence Assurance Act 2003)
holding entity has the meaning set out in section 9(3)
home jurisdiction means,—
(a) in relation to an overseas person that is a body corporate, the jurisdiction in which that body is incorporated:
(b) in relation to a Lloyd's underwriter, the United Kingdom
insurer means a person by whom or on whose behalf the risk or part of the risk to which a contract of insurance relates is accepted
investigator means a person appointed under section 128(2)(b)
licence—
(a) means a licence issued under Part 2; and
(b) includes a provisional licence
licensed insurer—
(a) means a person that holds a licence; and
(b) includes—
(i) a person that holds a provisional licence; and
(ii) a Lloyd's underwriter that is treated as a licensed insurer under section 201
life insurer means a licensed insurer that issues, or is liable under, life policies
life policy has the meaning set out in section 84
Lloyd's means the society of that name incorporated by the Imperial Act known as the Lloyd's Act 1871
Lloyd's underwriter means an underwriting member of Lloyd's
Minister means the Minister of the Crown who, under the authority of any warrant or with the authority of the Prime Minister, is for the time being responsible for the administration of this Act
New Zealand chief executive officer, in relation to an overseas insurer, means—
(a) the most senior officer of the insurer who is ordinarily resident in New Zealand; or
(b) another person who may be nominated by the insurer and is agreed to in writing by the Bank
New Zealand chief financial officer, in relation to an overseas insurer, means—
(a) the most senior officer of the insurer who is ordinarily resident in New Zealand (other than the New Zealand chief executive officer) who is responsible for the accounting and financial reporting obligations of the insurer; or
(b) another person who may be nominated by the insurer and is agreed to in writing by the Bank
New Zealand policyholder means a policyholder—
(a) who is ordinarily resident in New Zealand; or
(b) that is incorporated or formed in New Zealand
operating fraudulently or recklessly has the meaning set out in subsection (3)
ordinarily resident in New Zealand has the meaning set out in subsection (4)
overseas insurer—
(a) means an insurer that is an overseas person; and
(b) includes a Lloyd's underwriter that is treated as an overseas insurer under section 201
overseas person means—
(a) a body corporate incorporated outside New Zealand; or
(b) an unincorporated body that has its head office or principal place of business outside New Zealand
overseas policyholder preference means, in relation to an overseas insurer, a law or regulatory requirement of the overseas insurer's home jurisdiction that—
(a) relates to the recognition and priorities of claims of creditors or classes of creditors in the event of the insurer's insolvency; and
(b) has the effect, directly or indirectly, of—
(i) giving a material preference to policyholders in the insurer's home jurisdiction as compared to other policyholders; or
(ii) otherwise being materially disadvantageous to New Zealand policyholders as compared to policyholders in the insurer's home jurisdiction
overseas supervisor means any authority or body in any country other than New Zealand that performs functions in relation to insurers that correspond with, or are similar to, those conferred on the Bank under this Act
policyholder—
(a) means a person who has entered into a contract of insurance with an insurer; and
(b) includes any person claiming by, through, or under any policyholder (whether by assignment or otherwise)
premium includes any money or other consideration that is in substance a premium (regardless of what it is called in the contract)
provisional licence means a licence issued under section 233 or 234
regulations means regulations in force under this Act
reinsurance means insurance under which an insurer indemnifies another insurer (the cedent) against losses on 1 or more contracts of insurance entered into by the cedent
related party, in relation to an insurer, means any of the following:
(a) an associated person of the insurer:
(b) a director or relevant officer of the insurer or any other person occupying a position that allows the person to exercise significant influence over the management or administration of the insurer:
(c) a relative of a person referred to in paragraph (a) or (b):
(d) a director of an associated person of the insurer:
(e) a person who owns, or in any way has the power to control (whether directly or indirectly), or has the right to acquire, 10% or more of the voting rights of the insurer:
(f) a person who has control (whether directly or indirectly) or significant influence over 25% or more of the composition of the governing body of the insurer
relative has the same meaning as in section 2(1) of the Companies Act 1993
relevant officer, in relation to an insurer, means a person who occupies any of the following positions in respect of the insurer:
(a) in the case of an overseas insurer,—
(i) New Zealand chief executive officer:
(ii) New Zealand chief financial officer:
(iii) an appointed actuary:
(b) in any other case,—
(i) chief executive officer:
(ii) chief financial officer:
(iii) an appointed actuary
serious wrongdoing means an act, omission, or course of conduct that—
(a) is misleading or deceptive; or
(b) involves the unlawful or corrupt use of the funds or resources of an entity; or
(c) constitutes an offence that is punishable by imprisonment for a term of 2 years or more; or
(d) is oppressive, improperly discriminatory, or grossly negligent, or that constitutes gross mismanagement; or
(e) otherwise reflects adversely on a person’s competence, diligence, judgement, honesty, or integrity
solvency standard means a standard issued under section 53
statutory fund means a statutory fund maintained under subpart 3 of Part 2
subsidiary means a subsidiary within the meaning of sections 5 to 8 of the Companies Act 1993
voluntary administration means voluntary administration under Part 15A of the Companies Act 1993
voting right has the same meaning as in section 2(1) of the Reserve Bank of New Zealand Act 1989
voting security has the same meaning as in section 2(1) of the Reserve Bank of New Zealand Act 1989.
(2) For the purposes of this Act, a reference to an insurer's insurance business includes business relating to the investment, administration, and management of the assets of the insurer and of its statutory funds (if any).
(3) For the purposes of this Act, a licensed insurer or an associated person is operating fraudulently or recklessly if—
(a) it contracts liabilities that the directors did not, at the time the liabilities were contracted, honestly believe on reasonable grounds the insurer or person would be able to pay when they fell due for payment as well as all its other liabilities (including contingent liabilities); or
(b) it carries on any business, or operates, in a reckless manner; or
(c) it carries on any business or operates with intent to defraud its policyholders, creditors, shareholders, or members or the policyholders, creditors, shareholders, or members of any other person, or for any other fraudulent purpose.
(4) For the purposes of this Act, a person is ordinarily resident in New Zealand if that person—
(a) is domiciled in New Zealand; or
(b) is living in New Zealand and the place where that person usually lives is, and has been for the immediately preceding 12 months, in New Zealand, whether or not that person has on occasions been away from New Zealand during that period.
(5) For the purposes of this Act, a reference to information or data that is false or misleading includes a reference to information or data that is false or misleading by reason of—
(a) the form or context in which it is published or supplied; or
(b) the omission of any other information that is material in the form and context in which it is published or supplied.
(1) For the purposes of this Act, unless the context otherwise requires, a contract of insurance is a contract involving the transference of risk and under which a person (the insurer) agrees, in return for a premium, to pay to or for the account of another person (the policyholder) a sum of money or its equivalent, whether by way of indemnity or otherwise, on the happening of an uncertain event.
(2) In this section, uncertain event means an event—
(a) with respect to which there is (from the perspective of the policyholder) an element of uncertainty as to when or whether it will take place; and
(b) that is beyond the insurer's control.
(3) A contract is not prevented from being a contract referred to in subsection (1) merely because the insurer has a discretion as to whether or not it will pay to or for the account of the policyholder a sum of money or its equivalent on the happening of the uncertain event.
(4) However, a contract, to the extent that it provides for, or relates to, any of the following is not a contract of insurance for the purposes of this Act:
(a) a derivative transaction (within the meaning of section 136(1) of the Crown Entities Act 2004):
(b) a guarantee under which a person agrees to answer to another person for the debt, default, or liability of a third person:
(c) a repayment waiver (within the meaning of section 5 of the Credit Contracts and Consumer Finance Act 2003):
(d) a product or service guarantee or warranty in relation to any goods or services that is given or made by the manufacturer or supplier:
(e) any lump sum, annuity, pension, allowance, refund, or other payment arising from membership of a superannuation scheme (within the meaning of section 2A of the Superannuation Schemes Act 1989) or a KiwiSaver scheme (within the meaning of section 4(1) of the KiwiSaver Act 2006):
(f) gambling (within the meaning of section 4(1) of the Gambling Act 2003):
(g) any other transaction or matter of a class declared by regulations to be transactions or matters that are not by way of insurance.
(1) For the purposes of this Act, a person carries on insurance business in New Zealand if the person—
(a) is—
(i) a body corporate or an association of persons incorporated or formed in New Zealand; or
(ii) an overseas company that is required to be registered or deemed to be registered under the Companies Act 1993; or
(iii) ordinarily resident in New Zealand; and
(b) acts, or has at any material time acted, as an insurer in New Zealand or elsewhere; and
(c) is liable as an insurer under a contract of insurance to a New Zealand policyholder.
(2) However, a person does not carry on insurance business in New Zealand for the purposes of this Act if the person is—
(a) a Crown entity within the meaning of section 7(1) of the Crown Entities Act 2004 (for example, the Accident Compensation Corporation, the Earthquake Commission, or the Housing New Zealand Corporation); or
(b) an entity named in Part 1 of Schedule 1 of the Ombudsmen Act 1975; or
(c) the National Provident Fund Board (as continued in existence under section 12 of the National Provident Fund Restructuring Act 1990) or a subsidiary of the Board; or
(d) a public entity (within the meaning of section 5(1) of the Public Audit Act 2001) that is declared by regulations to be an entity to which this paragraph applies.
(1) For the purposes of this Act, unless the context otherwise requires, a person (A) is associated with another person (B) if—
(a) B is A's holding entity or subsidiary; or
(b) more than half of the voting securities of A, other than voting securities that carry no right to participate beyond a specified amount in a distribution of either profits or capital, are held by B and persons that are associated with B (whether directly or indirectly, but other than in a fiduciary capacity); or
(c) more than half of the voting securities of each of A and B, other than voting securities that carry no right to participate beyond a specified amount in a distribution of either profits or capital, are held by members of the other (whether directly or indirectly, but other than in a fiduciary capacity); or
(d) the businesses of A and B have been so carried on that the separate business of each person, or a substantial part of it, is not readily identifiable; or
(e) there is another person with which both persons are associated.
(2) Associated person has a corresponding meaning.
(3) For the purposes of this Act, a person is another person's holding entity if, and only if, that other person is its subsidiary.
This Act applies to a friendly society or a credit union (as those terms are defined in section 2 of the Friendly Societies and Credit Unions Act 1982) as if the friendly society or credit union were a body corporate.
The functions of the Bank under this Act are to—
(a) issue licences under Parts 2 and 5; and
(b) undertake prudential supervision of licensed insurers; and
(c) take appropriate action in respect of licensed insurers that have failed, are failing, or are likely to fail to comply with this Act or the regulations or are otherwise in financial or other difficulties; and
(d) carry out other functions and duties and exercise powers conferred on it by this Act and the regulations.
(1) The Minister may direct the Bank to have regard to a Government policy that relates to the Bank's functions under this Act.
(2) The Bank must have regard to every direction given by the Minister under this section.
(3) The Minister must consult with the Bank before giving a direction.
(4) A direction must—
(a) be set out in a written statement signed by the Minister; and
(b) as soon as practicable after it is given, be—
(i) presented to the House of Representatives by the Minister; and
(ii) published in the Gazette.
(5) The Minister may not give a direction that requires the performance or non-performance of a particular act by the Bank, or by any employee or officer of the Bank, or the bringing about of a particular result, in respect of a particular person.
(6) A direction may be amended, revoked, or replaced in the same way as it may be given.
This Act binds the Crown.
(1) Every person who carries on insurance business in New Zealand must hold a licence.
(2) A person who carries on insurance business in New Zealand without holding a licence commits an offence and is liable on summary conviction,—
(a) in the case of an individual, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $200,000 (or both):
(b) in the case of a body corporate, to a fine not exceeding $1,000,000.
(1) A person commits an offence if the person—
(a) is not a licensed insurer; and
(b) uses any name, title, trade mark, style, designation, or description that represents or implies that the person is a licensed insurer.
(2) Every person who commits an offence under this section is liable on summary conviction,—
(a) in the case of an individual, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $200,000 (or both):
(b) in the case of a body corporate, to a fine not exceeding $1,000,000.
(1) Any body corporate may apply to the Bank to be licensed as a licensed insurer.
(2) Applications must be—
(a) made in the manner that is specified by the Bank; and
(b) accompanied by payment of the prescribed fee for the application (if any).
(3) Every applicant must provide to the Bank the information that is required by the Bank to assist it in determining the application.
(4) An applicant commits an offence if it provides false or misleading information to the Bank for the purposes of an application and is liable, on summary conviction, to a fine not exceeding $1,000,000.
An applicant must provide to the Bank with its application—
(a) a copy of a fit and proper policy that complies with sections 32 to 34; and
(b) a certificate that—
(i) states that, in the opinion of all of the directors of the applicant after due inquiry by them, all of the directors and relevant officers of the applicant are, in accordance with the policy, fit and proper persons to hold their respective positions; and
(ii) is signed on behalf of all the directors of the applicant by at least 2 directors of the applicant (or, if the applicant has only 1 director, by that director); and
(iii) contains, or is accompanied by, a certificate from each director or relevant officer that is signed by the director or relevant officer and states that, in his or her opinion, he or she is, in accordance with the policy, a fit and proper person to hold the relevant position; and
(c) a copy of a risk management programme that complies with section 73.
(1) An applicant is entitled to be issued with a licence if the Bank is satisfied that—
(a) the applicant holds a current financial strength rating that complies with section 61 (unless a rating would not be required immediately after the issue of a licence as a result of the application of section 61(2)); and
(b) the applicant has the ability to carry on its business or proposed business in a prudent manner; and
(c) the applicant has the ability to comply with subpart 2 and the regulations; and
(d) in the case of an applicant who carries on, or proposes to carry on, business as a life insurer, the applicant has the ability to comply with subpart 3 and the regulations; and
(e) the applicant has the ability to comply with the proposed conditions of licence (if any); and
(f) the applicant has complied with section 17(a) and (b) and the fit and proper policy that is provided is satisfactory; and
(g) the applicant has complied with section 17(c) and the risk management programme that is provided is satisfactory; and
(h) the applicant's incorporation and ownership structure, ownership, governance structure, and financial strength are appropriate, having regard to the size and nature of the applicant's business or proposed business, including—
(i) the size and type of insurance business that is, or is proposed to be, carried out; and
(ii) the size and type of risks that are, or are proposed to be, insured; and
(i) in the case of an applicant that is an overseas person,—
(i) the law and regulatory requirements of the applicant's home jurisdiction that apply to the applicant and relate to the matters specified in subsection (3) are appropriate, having regard to whether that law and those requirements are, in terms of achieving the purposes of this Act, at least as satisfactory as the law and regulatory requirements of New Zealand that relate to those matters and apply to insurers incorporated in New Zealand; and
(ii) the nature and extent of prudential supervision that applies to the applicant and to insurers generally in the applicant's home jurisdiction are appropriate, having regard to whether the prudential supervision is, in terms of achieving the purposes of this Act, at least as satisfactory as the nature and extent of prudential supervision that applies to insurers incorporated in New Zealand; and
(j) the applicant—
(i) is registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008; or
(ii) complies with section 13(a) and (b) of that Act; and
(k) the applicant has the ability to comply with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (if the applicant is, or will be, a reporting entity under that Act); and
(l) the applicant complies with any other prescribed requirements.
(2) For the purposes of subsection (1)(c) and (d), the Bank must, in the case of an applicant that is an overseas person, have regard to any overseas policyholder preference.
(3) For the purposes of subsection (1)(i)(i), the matters are—
(a) the licensing, registration, or authorisation of insurers; and
(b) the supervision of insurers; and
(c) solvency and capital standards that apply to insurers; and
(d) financial reporting, accounting, and auditing standards; and
(e) corporate governance standards; and
(f) matters concerning insurers that are insolvent or otherwise in serious financial difficulties; and
(g) the disqualification of persons to be or to act as directors or relevant officers of an insurer.
(1) Subsection (2) applies when the Bank is—
(a) considering, for the purposes of section 18(1)(b), the ability of an applicant to carry on its business or proposed business in a prudent manner; or
(b) considering what conditions should be imposed under section 20 relating to the applicant carrying on its business or proposed business in a prudent manner; or
(c) considering whether a licensed insurer is carrying on its business in a prudent manner.
(2) The Bank must confine its consideration to the following matters:
(a) financial and human resources in relation to the size and nature of the business or proposed business:
(b) internal controls or proposed internal controls:
(c) the size and type of insurance risk that is, or is proposed to be, carried by the applicant or insurer:
(d) reinsurance arrangements that have been, or are proposed to be, entered into:
(e) the extent to which the business or proposed business involves activities that are not insurance business and the nature of those activities (and, in particular, whether those activities may be prejudicial to the solvency of the applicant or insurer or its ability to comply with this Act or the regulations):
(f) the nature and extent of transactions that the applicant or insurer has with, or in respect of, related parties (for example, loans to, or from, a related party or guarantees in respect of a related party's debts):
(g) any other prescribed matters.
(1) A body corporate may be licensed as a licensed insurer unconditionally or subject to any conditions that the Bank may impose under subsection (2).
(2) A licence may be subject to any of the following conditions:
(a) conditions that relate to any of the matters referred to in section 19 (which relates to carrying on business in a prudent manner), including any matters prescribed by regulations made for the purposes of section 19(2)(g):
(b) conditions that require a licensed insurer to maintain a solvency margin in accordance with an applicable solvency standard:
(c) conditions that require a life insurer to maintain solvency margins in respect of the statutory funds of the insurer in accordance with an applicable solvency standard:
(d) a condition that requires a specified amount or proportion of the licensed insurer's insurance business to relate to New Zealand policyholders (whether that amount or proportion is defined in terms of premium revenue, amount of insurance liability, a combination of premium revenue and amount of insurance liability, or in any other way):
(e) in the case of a licensed insurer that has not yet commenced carrying on insurance business in New Zealand, either or both of the following:
(i) a condition that specifies the time period within which the insurer must commence carrying on insurance business in New Zealand:
(ii) a condition that specifies an amount of insurance business in New Zealand that the insurer must have within a specified period (whether that amount is defined in terms of premium revenue, amount of insurance liability, a combination of premium revenue and amount of insurance liability, or in any other way):
(f) a condition that requires the licensed insurer or the directors of the insurer (or both) to certify that any conditions have been complied with (being certification that is given at the time or times and in the manner specified in the condition):
(g) a condition that requires a certificate given under paragraph (f) to be verified by an appointed actuary or another person specified in the condition (being verification that is given at the time or times and in the manner specified in the condition):
(h) any other prescribed conditions or conditions that relate to prescribed matters.
(3) Subsection (2)(c) does not limit subsection (2)(b).
(1) The Bank may, at any time after a licence is issued, by notice in writing to the licensed insurer,—
(a) impose conditions of licence (whether or not the licence is already subject to conditions); or
(b) vary, remove, add to, or substitute any conditions of licence.
(2) Section 20(2) and (3) apply for the purposes of subsection (1) with all necessary modifications.
(3) The Bank must not exercise a power referred to in subsection (1) unless—
(a) the Bank gives the licensed insurer not less than 7 days' notice in writing of the Bank's intention to do so; and
(b) the notice contains, or is accompanied by, a statement of the Bank's reasons; and
(c) the licensed insurer has a reasonable opportunity to make submissions to the Bank; and
(d) the Bank has regard to those submissions.
A licensed insurer commits an offence if it fails to comply with a condition of its licence and is liable, on summary conviction, to a fine not exceeding $500,000.
(1) If a licensed insurer is likely to fail to maintain a solvency margin at any future time, it must as soon as practicable report that matter to the Bank.
(2) A licensed insurer that fails to comply with subsection (1) commits an offence if it knows, or could be reasonably expected to know, that the insurer is likely to fail to maintain a solvency margin at any future time.
(3) A licensed insurer that commits an offence under this section is liable on summary conviction to a fine not exceeding $500,000.
(1) The Bank must, after it has made a decision on an application for a licence, give written notice of the decision to the applicant.
(2) If the Bank refuses to issue a licence, the notice must contain, or be accompanied by, a statement of the Bank's reasons for the refusal.
(3) The Bank must give notice of the issue of a licence on the Bank's Internet site.
(1) If a person that did not have a controlling interest in a licensed insurer when the licence was issued intends or proposes to acquire or obtain, after the licence is issued, a controlling interest in the insurer, the person must notify the Bank of that matter before the controlling interest is acquired or obtained.
(2) If a licensed insurer intends or proposes to change its corporate form (for example, as a result of demutualisation), the insurer must notify the Bank of that matter before the change takes place.
(3) The Bank must, after being notified under subsection (1) or (2), consider whether, if the controlling interest is obtained or acquired or the corporate form is changed, the Bank would still be satisfied of the matters in section 18(1)(a) to (l) (which are the matters that the Bank must be satisfied of before an applicant is entitled to be issued with a licence).
(4) The person referred to in subsection (1) and the licensed insurer that is the subject of a notice under subsection (1) or (2) must provide to the Bank the information that is required by the Bank to assist it in acting under subsection (3).
(5) A person or licensed insurer that fails to comply with this section commits an offence and is liable on summary conviction to a fine not exceeding $500,000.
The Bank must, within 20 working days of receiving under section 25(4) all of the information that is required by the Bank to assist it in acting under section 25(3), give written notice of its decision under that subsection together with a statement of the Bank's reasons to the licensed insurer and the person referred to in section 25(1) (if any).
For the purposes of sections 25 and 28, a person (A) has a controlling interest in an insurer if—
(a) the insurer is a subsidiary of A; or
(b) more than half of the voting securities of the insurer, other than voting securities that carry no right to participate beyond a specified amount in a distribution of either profits or capital, are held by A and persons that are associated with A (whether directly or indirectly, but other than in a fiduciary capacity).
(1) The Bank may cancel a licence if the Bank is satisfied that—
(a) 1 or more of the following applies:
(i) the licensed insurer has asked the Bank, by written notice, to cancel its licence:
(ii) the licensed insurer has ceased to carry on insurance business in New Zealand:
(iii) the licensed insurer has breached a condition of the licence that requires it to commence carrying on insurance business in New Zealand:
(iv) there has been a failure to comply with section 25(1), (2), or (4) in respect of the licensed insurer (whether the failure is by a person referred to in section 25(1) or the insurer):
(v) the Bank has given a notice under section 26 that, if a controlling interest is obtained or acquired or the corporate form is changed, it would no longer be satisfied of 1 or more of the matters in section 18(1)(a) to (l), and (whether before or after that notice is given) the controlling interest is obtained or acquired or the corporate form is changed:
(vi) the licensed insurer has been deregistered under section 18 of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 and has not been reregistered under that Act (whether under section 22 of that Act or otherwise) within the 3-month period from the date of deregistration:
(vii) the licensed insurer is a company that has been removed from the New Zealand register (within the meaning of the Companies Act 1993):
(viii) the licensed insurer is an overseas company that has been removed from the overseas register (within the meaning of the Companies Act 1993):
(ix) the licensed insurer has been liquidated, wound up, or dissolved or has otherwise ceased to exist; and
(b) the licensed insurer has no liabilities under any contracts of insurance in respect of insurance business carried on by it in New Zealand.
(2) The Bank must not, in the case of subsection (1)(a)(i) to (vi), cancel a licence unless—
(a) the Bank sends notice of the Bank's intention to cancel the licence to the insurer; and
(b) the notice contains, or is accompanied by, a statement of the Bank's reasons; and
(c) the notice specifies the date by which an objection to the cancellation must be delivered to the Bank (which must be not less than 20 working days after the date of the notice); and
(d) the Bank has regard to any objections that are received before the close of the date specified under paragraph (c).
(3) The Bank must, as soon as practicable after cancelling a licence, give—
(a) public notice of the cancellation; and
(b) in the case of a cancellation under subsection (1)(a)(i) to (vi), written notice of the cancellation to the insurer.
(4) In this section, public notice means that the notice is published—
(a) in 1 or more daily newspapers circulating in each of the cities of Auckland, Hamilton, Wellington, Christchurch, and Dunedin; and
(b) on the Bank's Internet site.
(1) If the Bank considers that it would, under section 28, cancel a licence if the licensed insurer had no liabilities under any contracts of insurance in respect of insurance business carried on by it in New Zealand, the Bank may direct the insurer to arrange, subject to the Bank’s approval under section 30, to assign its liabilities to 1 or more other licensed insurers.
(2) The licensed insurer must—
(a) effect the assignment of the liabilities within the period specified in the direction; and
(b) comply with any conditions relating to the assignment that are specified by the Bank in the direction; and
(c) comply with section 30(4).
(3) Subsections (1) and (2) have effect despite section 42(1) (which relates to transfers and amalgamations with the Bank's approval).
(4) The licensed insurer may, in connection with an assignment under this section, assign any rights or benefits in connection with contracts of insurance in respect of the insurance business carried on in New Zealand by the insurer (subject to any conditions specified by the Bank in the direction).
(5) A licensed insurer commits an offence if it fails to comply with a direction under this section and is liable, on summary conviction, to a fine not exceeding $500,000.
(1) A licensed insurer must not assign its liabilities under section 29, and a purported assignment under that section is of no effect, unless the assignment is approved by the Bank under subsection (2).
(2) The Bank may only approve a proposed assignment of an insurer’s liabilities under section 29 if the Bank is satisfied that the assignment is appropriate, having regard to—
(a) the interests of the insurer’s policyholders; and
(b) the interests of the policyholders of the licensed insurer or insurers to whom the liabilities are to be assigned; and
(c) any other matter the Bank considers relevant.
(3) The approval must be in writing and may be made subject to specified conditions.
(4) If the Bank approves an assignment, the insurer must—
(a) comply with the conditions of the approval; and
(b) give reasonable notice (in writing) of the assignment to the insurer’s policyholders; and
(c) give the Bank such written evidence of the assignment as the Bank reasonably requires.
If a licensed insurer (the first insurer) accepts an assignment of liabilities from another licensed insurer (the second insurer) that is approved by the Bank under section 30, the following are taken to have occurred:
(a) contracts of insurance in respect of which liability is accepted by the first insurer (the transferring contracts) are to be treated for all purposes as if each contract had been transferred by novation from the second insurer to the first insurer:
(b) a policyholder under a transferring contract is taken to have the same rights against the first insurer as the policyholder would have against that insurer had the person’s contract of insurance been transferred by novation to the first insurer:
(c) the rights of the first insurer against policyholders under transferring contracts are the same as they would be had the transferring contracts been transferred by novation to the first insurer from the second insurer.
(1) Every licensed insurer must—
(a) be subject to a written policy that governs the qualifications, requirements, and other criteria that a person must have or satisfy in order to be appointed, and to continue to hold a position, as a director or relevant officer of the insurer, being a policy for the purpose of ensuring that only fit and proper persons are appointed to, and continue to hold, those positions (a fit and proper policy); and
(b) take all practicable steps to comply with that policy.
(2) The fit and proper policy must clearly specify the qualifications, requirements, and other criteria for a particular position, including matters relating to a person's character, competence, and experience relative to the duties of the position.
(3) The qualifications, requirements, and other criteria for a particular position that are specified in the fit and proper policy must take into account the fit and proper matters set out in section 34.
(4) The fit and proper policy must—
(a) include the processes to be undertaken in assessing whether a person is fit and proper to be appointed to, and hold, a position, including processes relating to—
(i) who will conduct fit and proper assessments on behalf of the insurer; and
(ii) what information will be obtained and how it will be obtained; and
(iii) the matters that will be considered before determining if a person is fit and proper for a position; and
(iv) the decision-making processes that will be followed; and
(b) specify the actions to be taken where a person is assessed as not being fit and proper; and
(c) require fit and proper reassessments for each position to be conducted at least once in every 2-year period to ensure that the person who holds the position remains a fit and proper person; and
(d) contain adequate provisions—
(i) to encourage any person to disclose information to the insurer or the Bank that may be relevant to a fit and proper assessment; and
(ii) for giving or obtaining any consents required for the collection and use of any information by the insurer to comply with the policy or this Act and by the Bank for its powers and functions under this Act.
(5) A licensed insurer must obtain the Bank's approval before its fit and proper policy is amended in a material way.
(6) A licensed insurer that fails to comply with this section commits an offence and is liable, on summary conviction, to a fine not exceeding $500,000.
(1) If the licensed insurer is part of a group of insurers, the fit and proper policy that the insurer is required to be subject to may, at the option of the insurer, be a fit and proper policy that applies to the insurer and 1 or more other members of that group (a group policy).
(2) However, if the group policy does not comply with the requirements of section 32(1) to (4) in any respect, the licensed insurer must prepare a supplementary document that, when taken together with the group policy, ensures that the requirements of section 32(1) to (4) are complied with (in which case the insurer's fit and proper policy must be taken to be the group policy together with the supplementary document).
(1) For the purposes of section 32, the fit and proper matters in relation to a particular position are as follows:
(a) whether the person has the qualifications and experience reasonably expected for the position:
(b) whether the person has been concerned with or taken part in the management of a person that has been—
(i) put into liquidation, receivership, or voluntary administration or has otherwise been wound up or dissolved; or
(ii) declared to be subject to statutory management or judicial management; or
(iii) subject to an arrangement or process under the laws of an overseas jurisdiction that corresponds, or is similar, to any of those specified in subparagraph (i) or (ii):
(c) whether the person has, in any civil or criminal proceedings, been found by a court or tribunal to have—
(i) engaged in an act, omission, or course of conduct that constitutes serious wrongdoing; or
(ii) aided, abetted, counselled, or procured any other person to engage in an act, omission, or course of conduct that constitutes serious wrongdoing:
(d) whether the person has at any time been adjudged bankrupt and, if the person has been discharged from bankruptcy, the time that has elapsed since the person was discharged:
(e) whether the person—
(i) is the subject of current disciplinary action in respect of a profession or occupation (being disciplinary action taken by a regulatory or disciplinary body for persons engaging in that profession or occupation); or
(ii) has been the subject of disciplinary action of that kind that has involved a finding of guilt, however expressed:
(f) whether the person has at any time been prohibited from 1 or more of the following under an order made, or a notice given, under New Zealand law or the law of an overseas jurisdiction:
(i) being a director of an entity:
(ii) being a promoter of an entity:
(iii) being concerned or taking part in the management of an entity:
(g) whether the person has at any time—
(i) failed to comply with the directions of the Bank given by or under this Act or any other enactment; or
(ii) failed to comply with the directions of an overseas supervisor given by or under the law of an overseas jurisdiction; or
(iii) obstructed or hindered the Bank in its exercise or performance of a power, function, or duty under this Act or any other enactment; or
(iv) obstructed or hindered an overseas supervisor in its exercise or performance of a power, function, or duty under the law of an overseas jurisdiction:
(h) whether the person has any conflict or potential conflict of interest (direct or indirect) that affects, or may affect, the person's proper performance of the duties of the position:
(i) whether the person has been convicted of an offence and, if so,—
(i) the nature of the offence; and
(ii) the circumstances in which the offence was committed (including the time that has elapsed since the offence was committed and the person's age when the offence was committed).
(2) The matters in subsection (1) apply whether the circumstance, conduct, or event is, or occurs, in New Zealand or any other country.
(1) A licensed insurer must, no later than 20 working days after the appointment of a new director or relevant officer, provide to the Bank a certificate that complies with subsection (4) in respect of the new director or relevant officer.
(2) In addition, if the Bank has given a notice in writing to a licensed insurer that requires the insurer to provide to the Bank a certificate that complies with subsection (4) in respect of a specified director or relevant officer, the insurer must, within the time specified in the notice, comply with the requirement.
(3) Subsection (2) applies whether or not a certificate in respect of the director or officer has previously been provided under this section.
(4) The certificate must—
(a) specify the director's or relevant officer's full name, previous names (if any), and residential address; and
(b) in the case of subsection (1), specify the date of the appointment and the director's or relevant officer's date of birth; and
(c) state that, in the opinion of all directors of the licensed insurer after due inquiry by them, the director or relevant officer is, in accordance with its fit and proper policy, a fit and proper person to hold the relevant position; and
(d) contain, or be accompanied by, a certificate signed by the director or relevant officer that states that, in his or her opinion, he or she is, in accordance with the licensed insurer's fit and proper policy, a fit and proper person to hold the relevant position; and
(e) contain, or be accompanied by, a summary of information that is relevant to the consideration of whether the person satisfies the licensed insurer's fit and proper policy; and
(f) be signed on behalf of all the directors of the licensed insurer by at least 2 directors of the insurer (or, if the insurer has only 1 director, by that director); and
(g) be in the prescribed form (if any).
(5) Every licensed insurer that is required to provide a certificate to the Bank under this section must provide to the Bank any further information that is required by the Bank to assist it in considering whether the director or relevant officer is a fit and proper person to hold the relevant position.
(6) A licensed insurer commits an offence if the insurer fails to comply with this section and is liable, on summary conviction, to a fine not exceeding $500,000.
(1) The Bank may, by notice to an overseas insurer, exempt the insurer from compliance with section 35(1) to the extent that it relates to the directors of the insurer.
(2) The Bank must, before granting an exemption, be satisfied that the law or regulatory requirements of the home jurisdiction of the insurer—
(a) provide for the assessment by an overseas supervisor of whether the persons who are appointed as directors of the insurer are fit and proper persons to be appointed to that position; and
(b) provide for the removal of a person from being a director of the insurer if the overseas supervisor considers that the person is not a fit and proper person to hold the relevant position.
(3) This section is subject to section 228 (which provides for general provisions relating to exemptions).
(1) This section applies if the Bank, after having regard to the fit and proper matters specified in section 34, has reasonable grounds to believe that a director or relevant officer of a licensed insurer is not a fit and proper person to hold the relevant position.
(2) If this section applies, the Bank may remove the director or relevant officer from the relevant position from a date specified by the Bank.
(3) If the Bank acts under subsection (2), the Bank may give a direction that the director or relevant officer may not be reappointed as a director or relevant officer of the licensed insurer—
(a) at any time; or
(b) for a period specified by the Bank; or
(c) until 1 or more things specified by the Bank occur (for example, the director or relevant officer receives a specified qualification).
(4) This section may apply regardless of whether or not the director or relevant officer is, in accordance with the licensed insurer's fit and proper policy, a fit and proper person to hold his or her position.
(5) This section does not apply in respect of a director of an overseas insurer.
(6) This section has effect despite any contract, employment agreement, enactment, or rule of law, or the terms of the constitution of a licensed insurer.
(1) The Bank must not exercise a power referred to section 37 unless—
(a) the Bank gives the licensed insurer and the director or relevant officer not less than 7 days' notice in writing of the Bank's intention to do so; and
(b) the notice contains, or is accompanied by, a statement of the Bank's reasons; and
(c) the licensed insurer and the director or relevant officer have a reasonable opportunity to make submissions to the Bank; and
(d) the Bank has regard to those submissions.
(2) The Bank must exercise the powers conferred by section 37 by giving notice in writing to—
(a) the licensed insurer; and
(b) the director or the relevant officer; and
(c) in the case of a director, the Registrar of Companies.
(3) A notice given under subsection (2)(c) is sufficient compliance with section 159 of the Companies Act 1993.
(4) A notice given under this section may be amended, revoked, or replaced in the same way as it may be given.
(1) If a person has been removed from a particular position under section 37, the person may not accept reappointment to the position in breach of a direction given under section 37(3).
(2) A person commits an offence if the person fails to comply with subsection (1) and is liable, on summary conviction, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $200,000 (or both).
(1) A director or relevant officer or former director or relevant officer who is the subject of a decision of the Bank under section 37 may appeal to the High Court against the decision.
(2) An appeal is by way of rehearing.
(3) A decision against which an appeal is lodged continues in force pending the determination of the appeal unless the High Court orders otherwise.
(1) Any party to an appeal under section 40 who is dissatisfied with any determination of the High Court in the proceedings as being erroneous in point of law may, with the leave of the High Court or, if the High Court refuses leave, with the leave of the Court of Appeal, appeal to the Court of Appeal against the determination; and section 66 of the Judicature Act 1908 applies to any such appeal.
(2) In determining whether to grant leave to appeal, the Court of Appeal must have regard to whether the question of law involved in the appeal is one that, by reason of its general or public importance or for any other reason, ought to be submitted to the Court of Appeal for its decision.
(3) The Court of Appeal, in granting leave, may impose the conditions that it thinks fit, whether as to costs or otherwise.
(4) The decision of the Court of Appeal on any application for leave to appeal, or on an appeal under this section, is final.
(1) A licensed insurer must obtain the written approval of the Bank before—
(a) giving effect to a transaction that involves,—
(i) in the case of an overseas insurer, the transfer of all or part of the insurer's New Zealand insurance business to another person; or
(ii) in the case of any other insurer, the transfer of all or part of the insurer's insurance business to another person; or
(b) the insurer amalgamates with another person (whether it occurs under Part 13 of the Companies Act 1993 or any other law of similar effect that results in 2 or more entities amalgamating and continuing as 1 entity).
(2) For the purposes of sections 43 to 51,—
amalgamated entity means the single entity that is proposed to result from and continue after a proposed amalgamation that requires approval under this section
transferee means the person to whom all or part of the licensed insurer's insurance business is proposed to be transferred under a proposed transfer that requires approval under this section.
(3) A licensed insurer commits an offence if—
(a) the insurer fails to comply with subsection (1); or
(b) in the case of the Bank refusing to give its approval under subsection (1), the insurer takes any further steps after the refusal under the Companies Act 1993 or any other enactment to give effect to the proposed transfer or amalgamation.
(4) Every licensed insurer that commits an offence under subsection (3) is liable, on summary conviction, to a fine not exceeding $1,000,000.
(5) This section does not apply in respect of a transfer or amalgamation under section 29, sections 162 to 165, or subpart 4 of Part 4.
(1) A request for the Bank to give its approval under section 42 must be—
(a) made in the manner that is specified by the Bank; and
(b) accompanied by payment of the prescribed fee for the request (if any).
(2) A joint request may be made by 2 or more licensed insurers that are parties to the proposed transfer or amalgamation.
(3) A licensed insurer that makes a request and every other party to the proposed transfer or amalgamation must provide to the Bank the information that is required by the Bank to assist it in determining whether to give its approval.
(1) The Bank may arrange for an independent actuary to make a written report on a proposed transfer or amalgamation.
(2) A licensed insurer that makes a request and every other party to the proposed transfer or amalgamation must provide to the actuary the information that is required by the actuary to assist him or her in preparing the report.
(1) A licensed insurer that makes a request under section 43 is liable to pay to the Bank the costs incurred by the Bank in obtaining the actuary's report under section 44 (and in the case of a joint application, the licensed insurers are jointly and severally liable to pay those costs).
(2) An amount payable under subsection (1) is recoverable as a debt due to the Bank in any court of competent jurisdiction.
In considering a request made under section 43, the Bank must have regard to the following matters:
(a) the ability of the transferee, or the amalgamated entity, to comply with subpart 2 and, if applicable, subpart 3:
(b) the interests of the policyholders of the insurers that are parties to the proposed transfer or amalgamation:
(c) any other matter the Bank considers relevant.
(1) The Bank may, after considering a request made under section 43, by notice in writing to the licensed insurer or insurers,—
(a) give its approval unconditionally or subject to any conditions that the Bank may impose under subsection (2); or
(b) refuse to give its approval.
(2) The approval may be subject to any of the following conditions:
(a) conditions that relate to any of the matters referred to in section 19 (which relates to carrying on business in a prudent manner), including any matters prescribed by regulations made for the purposes of section 19(2)(g):
(b) a condition that requires a specified amount or proportion of the transferee's or amalgamated entity's insurance business to relate to New Zealand policyholders (whether that amount or proportion is defined in terms of premium revenue, amount of insurance liability, a combination of premium revenue and amount of insurance liability, or in any other way):
(c) a condition that requires a licensed insurer or the directors of a licensed insurer (or both) to certify that any conditions have been complied with (being certification that is given at the time or times and in the manner specified in the condition):
(d) any other prescribed conditions or conditions that relate to prescribed matters.
(3) If the Bank refuses to give its approval, it must give a notice to the licensed insurer or insurers that contains a statement of its reasons.
A licensed insurer commits an offence if it fails to comply with a condition of the approval and is liable, on summary conviction, to a fine not exceeding $500,000.
Sections 42 to 48 do not limit any other enactment that must be complied with in order to give effect to a proposed transfer or amalgamation that requires approval under section 42 (for example, in the case of amalgamating companies, the requirements of Part 13 of the Companies Act 1993).
Nothing in sections 42 to 49 invalidates any transfer or amalgamation made without the written approval of the Bank.
(1) If the Bank approves a transfer under section 42 and, for the purposes of the transfer, a licensed insurer (the first insurer) accepts an assignment of liabilities from another licensed insurer (the second insurer), the following are taken to have occurred:
(a) contracts of insurance in respect of which liability is accepted by the first insurer (the transferring contracts) are to be treated for all purposes as if each contract had been transferred by novation from the second insurer to the first insurer:
(b) a policyholder under a transferring contract is taken to have the same rights against the first insurer as the policyholder would have against that insurer had the person’s contract of insurance been transferred by novation to the first insurer:
(c) the rights of the first insurer against policyholders under transferring contracts are the same as they would be had the transferring contracts been transferred by novation to the first insurer from the second insurer.
(2) An agreement between the first insurer and the second insurer may, with the Bank's approval, allocate liabilities in respect of the transferring contracts (and that agreement is binding on the first insurer, the second insurer, and the policyholders under those contracts).
(3) Subsection (1) is subject to subsection (2).
The Bank must publish its policies in relation to how it acts, or proposes to act,—
(a) in determining applications for licences; and
(b) in imposing, varying, removing, or adding to conditions of licences; and
(c) in determining requests for approvals under section 43.
(1) The Bank may, by a notice signed by the Governor, issue solvency standards for the purposes of this Act.
(2) A solvency standard may be expressed to apply in relation to—
(a) all licensed insurers; or
(b) a specified class or classes of licensed insurers; or
(c) 1 or more specified licensed insurers.
(3) A solvency standard may—
(a) have general or specific application:
(b) differ according to differences in time or circumstance.
(4) A solvency standard is a regulation for the purposes of the Regulations (Disallowance) Act 1989 but is not a regulation for the purposes of the Acts and Regulations Publication Act 1989.
(5) A solvency standard must be presented to the House of Representatives in accordance with section 4 of the Regulations (Disallowance) Act 1989.
(1) The Bank must give notice of the issue of a solvency standard in the Gazette.
(2) The notice in the Gazette must state—
(a) the name of the solvency standard; and
(b) a brief description of the nature of the solvency standard; and
(c) where copies of the solvency standard are available for inspection and purchase.
(3) The notice in the Gazette need not contain the solvency standard.
(4) The Bank must make a solvency standard available to the public by making copies of it available—
(a) for inspection at all reasonable times, free of charge,—
(i) at the head office of the Bank; and
(ii) on the Bank's Internet site; and
(b) for purchase at all reasonable times and at a reasonable price.
(1) The Bank must not issue a solvency standard unless—
(a) the Bank has consulted with the persons or representatives of the persons that the Bank considers will be substantially affected by the issue of the standard; and
(b) those persons have had a reasonable opportunity to comment to the Bank; and
(c) the Bank has considered those comments.
(2) A failure to comply with subsection (1) does not affect the validity of the standard.
A solvency standard may prescribe 1 or more of the following matters:
(a) the methods for determining or calculating a solvency margin for the purposes of a condition of a licence (whether by reference to a specified formula, framework, or amount, a combination of specified formulae, frameworks, or amounts, or otherwise):
(b) the methods for determining whether, and the extent to which, a solvency margin is being maintained:
(c) requirements relating to reports about the financial condition of a licensed insurer (including requirements relating to the information that must be contained in the reports, who must prepare the reports, how often the reports must be prepared, other matters concerning the preparation of reports, to whom the reports must be provided, and when the reports must be provided):
(d) for the purposes of any of paragraphs (a) to (c),—
(i) the methods for estimating or valuing the assets or liabilities (or both) of a licensed insurer:
(ii) the assets of a licensed insurer that must be disregarded (in whole or in part) for the purposes of estimating or valuing the assets of a licensed insurer:
(e) for the purposes of any of paragraphs (a) to (c), any other matters relating to the assessment, or disclosure, of—
(i) whether, and the extent to which, the value of a licensed insurer's assets exceeds the value of its liabilities (including contingent liabilities); or
(ii) whether a licensed insurer is able to pay its liabilities as they become due in the normal course of business; or
(iii) other matters relating to the financial condition of a licensed insurer:
(f) matters relating to the manner in which a review of actuarial information under section 77 is to be carried out.
A licensed insurer commits an offence if it fails to comply with any of the requirements of a solvency standard under section 56(c) that apply to the insurer and is liable, on summary conviction, to a fine not exceeding $500,000.
(1) The following written material may be incorporated by reference in a solvency standard:
(a) standards, requirements, or recommended practices of international or national organisations:
(b) standards, requirements, or recommended practices prescribed in any country or jurisdiction:
(c) any other written material that deals with technical matters and is too large or impractical to include in, or print as part of, the solvency standard.
(2) Schedule 1 applies to any material incorporated by reference in a solvency standard.
(1) The Bank may, by a notice signed by the Governor,—
(a) amend or revoke a solvency standard:
(b) revoke and replace a solvency standard.
(2) Sections 54 and 55 apply, with all necessary modifications, for the purposes of subsection (1).
(3) However, the Bank is not required to comply with section 55 in respect of an amendment to a solvency standard if, in its opinion, the amendment corrects a minor error or is otherwise of a minor nature.
(1) The Bank may, by notice to an overseas insurer, exempt the insurer from compliance with a solvency standard or a part of a solvency standard.
(2) The Bank must, before granting an exemption, be satisfied that—
(a) the overseas insurer is required, under the law or regulatory requirements of the home jurisdiction of the insurer, to comply with standards or requirements that relate to the same or similar matters that are covered by the solvency standard or the part of a solvency standard to which the exemption relates (the overseas standards or requirements); and
(b) the overseas standards or requirements—
(i) cover the New Zealand business of the overseas insurer; and
(ii) are, in terms of achieving the purposes of this Act, at least as satisfactory as the solvency standard or the part of a solvency standard to which the exemption relates; and
(c) the nature and extent of prudential supervision that applies to the overseas insurer in respect of the overseas standards or requirements is, in terms of achieving the purposes of this Act, at least as satisfactory as the nature and extent of prudential supervision that applies to insurers incorporated in New Zealand in respect of the solvency standard or the part of a solvency standard to which the exemption relates.
(3) This section is subject to section 228 (which provides for general provisions relating to exemptions).
(1) A licensed insurer must have a current financial strength rating that is given by an approved rating agency.
(2) Subsection (1) does not apply to—
(a) a licensed insurer that is a friendly society or a credit union if it has an annual gross premium income (as determined in the prescribed manner) that is less than a prescribed amount; or
(b) a licensed insurer if the only kind of insurance business carried on by the insurer is reinsurance business; or
(c) a captive insurer.
(3) Sections 63 to 71 do not apply to—
(a) a reinsurer in respect of its reinsurance business; or
(b) a captive insurer.
(4) A licensed insurer commits an offence if it fails to comply with this section and is liable, on summary conviction, to a fine not exceeding $1,000,000.
(1) The Bank may approve a person as a rating agency for the purposes of this Act.
(2) In deciding whether to approve a person as a rating agency, the Bank must have regard to the following:
(a) the independence of the rating agency:
(b) the adequacy of resources available to the rating agency:
(c) the credibility and objectivity of the rating agency's methodology:
(d) the consistency and comparability of the rating agency's ratings when assessed against ratings industry practice:
(e) the adequacy of the rating agency's disclosure of information, including information about its processes, experience, and ownership:
(f) relevant international standards, codes, and recommended practices relating to the ratings industry.
(3) The Bank may, at any time, review the approval of a person as a rating agency, and in conducting the review the Bank must have regard to the matters in subsection (2).
(4) If, after conducting the review, the Bank considers that the person should no longer be an approved rating agency, it may revoke the approval.
(5) A financial strength rating given to an insurer by an agency at a time when the agency was an approved rating agency does not cease to be a rating from an approved rating agency for the purposes of this Act by reason of the fact that the approval of that agency has expired or has been revoked.
(6) The Bank must publish and keep up to date a list of approved rating agencies on the Bank's Internet site at all reasonable times.
(1) A licensed insurer must, within 20 working days after receiving notice in writing that its financial strength rating has changed, deliver to the Bank a certificate by the approved rating agency of the new rating that also states the date on which it was given.
(2) A licensed insurer must, within 20 working days after receiving notice in writing that a credit watch warning has been given by an approved rating agency in respect of the insurer's financial strength rating, deliver to the Bank a certificate by the approved rating agency of the credit watch warning that also states the date on which it was given and the reasons for it.
(3) In this section, credit watch warning means any word, expression, or symbol used by an agency to indicate that the agency has an insurer under consideration with a view to a possible downgrading in a financial strength rating given to the insurer by the agency.
(1) A licensed insurer that is required to comply with section 61(1) or that otherwise has a current financial strength rating given by an approved rating agency must, before entering into or renewing a contract of insurance with a New Zealand policyholder, disclose in writing to the policyholder—
(a) the insurer's current financial strength rating; and
(b) the name of the agency by which the rating was given; and
(c) the rating scale of which the rating referred to in paragraph (a) forms part.
(2) If it is not reasonably practicable for a licensed insurer to disclose the matters referred to in subsection (1) in writing and before the contract is entered into or renewed, that subsection is deemed to have been complied with if—
(a) those matters (other than the rating scale) are disclosed to the policyholder orally before the contract is entered into or renewed; and
(b) those matters are disclosed to the policyholder in writing as soon as it becomes practicable to do so.
(3) For the purposes of this section, a matter is not to be taken as having been disclosed unless it is disclosed clearly and prominently.
(1) A licensed insurer that does not have a current financial strength rating as a result of section 61(2)(a) must, before entering into a contract of insurance or renewing a contract of insurance with a New Zealand policyholder, disclose in writing to the policyholder—
(a) that the insurer is not required to have a current financial strength rating; and
(b) the reason why it is not required to have a current financial strength rating.
(2) If it is not reasonably practicable for a licensed insurer to disclose the matters referred to in subsection (1) in writing and before the contract is entered into or renewed, that subsection is be deemed to have been complied with if those matters are disclosed to the policyholder—
(a) orally before the contract is entered into or renewed; and
(b) in writing as soon as it becomes practicable to do so.
(3) For the purposes of this section, a matter is not to be taken as having been disclosed unless it is disclosed clearly and prominently.
(1) If a contract of insurance is entered into or renewed, as the case may be, and section 64 or 65 (as the case may be) has not been complied with, the New Zealand policyholder may, within 20 working days after the contract is entered into or renewed, cancel the contract by notice in writing to the insurer.
(2) If a contract of insurance is cancelled under subsection (1), the New Zealand policyholder ceases to be liable for the payment of any premiums relating to the period commencing on the date on which the contract is cancelled and ending on the date on which the contract would have terminated, and any premiums paid by the policyholder to the insurer or any intermediary that relate to that period must be repaid to the policyholder by the insurer.
(1) If an Internet site that is maintained by, or on behalf of, a specified licensed insurer contains information or advertising about the insurer's insurance products, the insurer must ensure that the Internet site—
(a) states clearly and prominently—
(i) the insurer's current financial strength rating; and
(ii) the name of the agency by which the rating was given; and
(iii) the rating scale of which the rating referred to in subparagraph (i) forms part; or
(b) contains a prominent link to another Internet site that clearly and prominently states the matters specified in paragraph (a).
(2) In this section, a specified licensed insurer means a licensed insurer that is required to comply with section 61(1) or that otherwise has a current financial strength rating given by an approved rating agency.
(1) No advertisement that refers to the current financial strength rating, or to any part of the rating, of a licensed insurer may be distributed unless the advertisement also states clearly and prominently—
(a) the rating; and
(b) the name of the agency by which the rating was given; and
(c) that any scale of which the rating forms part is available for inspection at every office in New Zealand of the insurer.
(2) For the purposes of this section and section 70, an advertisement is distributed if it is communicated to the public in New Zealand by newspaper, magazine, brochure, pamphlet, notice, circular, radio or television broadcast, film, the Internet, or other means.
(3) However, this section does not apply in relation to advertising on an Internet site that is maintained by, or on behalf of, a licensed insurer (but section 67 will apply).
If a licensed insurer's financial strength rating is downgraded, the insurer must, within 60 working days of the downgrading, disclose in writing the following matters to every New Zealand policyholder under a contract of insurance with the insurer that has a duration of more than 1 year (if any):
(a) a statement to the effect that the insurer's financial strength rating has been downgraded:
(b) the insurer's current financial strength rating:
(c) the name of the agency by which the rating was given:
(d) the rating scale of which the rating referred to in paragraph (b) forms part.
(1) A licensed insurer must not—
(a) disclose to a New Zealand policyholder a rating from a non-approved agency; or
(b) distribute an advertisement relating to any of the insurer's insurance products that refers to a rating from a non-approved agency.
(2) Subsection (1)(a) does not apply in respect of a disclosure to any policyholder that is a related party or an employee of the insurer.
(3) In this section, rating from a non-approved agency means, in relation to a licensed insurer, an assessment of its financial strength or creditworthiness that is in substance a financial strength rating or credit rating (whether called a rating, grading, scoring, ranking, or by any other name) that is issued or given by an agency that is not an approved rating agency.
A licensed insurer commits an offence if it fails to comply with any of sections 63 to 70 and is liable, on summary conviction, to a fine not exceeding $500,000.
(1) If an overseas policyholder preference may apply in respect of a licensed insurer that is an overseas insurer, the insurer must disclose the nature and the extent of the overseas policyholder preference in the circumstances and in the manner that is prescribed.
(2) An overseas insurer commits an offence if it fails to comply with this section and is liable, on summary conviction, to a fine not exceeding $500,000.
(1) A licensed insurer must be subject to a risk management programme and take all practicable steps to comply with that programme.
(2) The risk management programme must—
(a) be in writing; and
(b) set out the procedures that the licensed insurer will use for the effective identification and management of the following risks:
(i) insurance risk:
(ii) credit risk:
(iii) liquidity risk:
(iv) market risk:
(v) operational risk:
(vi) a prescribed type of risk (being a type of risk that is specified in the regulations to apply to the insurer or to a specified class of insurers that includes the insurer); and
(c) set out appropriate documentation and record-keeping requirements; and
(d) describe the steps that the licensed insurer will take to ensure that the programme remains current, which must include procedures for regular review of the programme to systematically identify and address deficiencies in the effectiveness of the programme; and
(e) be appropriate to the operations of the licensed insurer, having regard to the factors relevant to the risks referred to in paragraph (b) (for example, the size of the licensed insurer, its corporate structure (including its relationship with associated persons), its funding structure, the market sector in which it operates, and its business strategy).
(3) The Bank may issue, in the manner that the Governor thinks fit, guidelines relating to the risk categories referred to in subsection (2)(b) that must be covered by the risk management programme (being guidelines that do not have the force of law).
(4) A licensed insurer must obtain the Bank's approval before its risk management programme is amended in a material way.
(1) If a licensed insurer is part of a group of insurers, the risk management programme that the insurer is required to be subject to may, at the option of the insurer, be a risk management programme that applies to the insurer and 1 or more other members of that group (a group programme).
(2) However, if the group programme does not comply with the requirements of section 73(2) in any respect, the licensed insurer must prepare a supplementary document that, when taken together with the group programme, ensures that the requirements of section 73(2) are complied with (in which case the insurer's risk management programme must be taken to be the group programme together with the supplementary document).
A licensed insurer commits an offence if it fails to comply with section 73 and is liable, on summary conviction, to a fine not exceeding $500,000.
(1) A licensed insurer must have an actuary appointed by the insurer.
(2) A licensed insurer may, at any time, appoint an alternate actuary to act as the insurer's appointed actuary if the person appointed under subsection (1) is unable to act (whether by reason of absence or illness or otherwise).
(3) The licensed insurer must, within 6 weeks after a person stops being an appointed actuary under subsection (1), appoint another person to be an appointed actuary (unless the person is replaced under section 147 or 190).
(4) A licensed insurer must not appoint a person under subsection (1) or (2) unless the person is an actuary and is, in accordance with the insurer's fit and proper policy, a fit and proper person to hold the position.
(5) A person appointed under subsection (1) or (2) may be an employee of the licensed insurer or engaged under a contract for services.
(1) A licensed insurer must ensure that the actuarial information contained in, or used in the preparation of, the financial statements of the insurer and any group financial statements referred to in section 81(1) is reviewed by an appointed actuary.
(2) The review must be carried out in accordance with an applicable solvency standard.
(3) For the purposes of this section and section 78, actuarial information means—
(a) information relating to an insurer's calculations of premiums, claims, reserves, dividends, insurance and annuity rates, and technical provisions; and
(b) information relating to assessments of the probability of uncertain future events occurring and the financial implications for the insurer if those events do occur.
(4) A licensed insurer commits an offence if it fails to comply with this section and is liable, on summary conviction, to a fine not exceeding $500,000.
The appointed actuary's report in respect of a review under section 77 must state—
(a) the actuary's name; and
(b) the work done by the actuary; and
(c) the scope and limitations of the review; and
(d) the existence of any relationship (other than that of actuary) that the actuary has with, or any interests that the actuary has in, the licensed insurer or any of its subsidiaries; and
(e) whether the actuary has obtained all information and explanations that he or she has required; and
(f) whether, in the actuary's opinion and from an actuarial perspective, the financial statements and any group financial statements comply with the solvency standards in respect of the actuarial information contained in them or used in the preparation of them, and if they do not, the respects in which they fail to comply; and
(g) whether, in the actuary's opinion and from an actuarial perspective, the licensed insurer is maintaining the solvency margin that applies under a condition imposed under section 20(2)(b) (as at the balance date of the insurer); and
(h) in the case of a life insurer, whether, in the actuary's opinion and from an actuarial perspective, the life insurer is maintaining the solvency margins that apply in respect of its statutory funds under a condition imposed under section 20(2)(c) (as at the balance date of the insurer).
(1) A licensed insurer must ensure that the auditor's report that is prepared under section 16 of the Financial Reporting Act 1993 is accompanied by the appointed actuary's report prepared under section 78 when—
(a) the auditor's report is delivered for registration under section 18 of that Act; and
(b) the auditor's report is included in the insurer's annual report (in the case of an insurer that includes the auditor's report in its annual report).
(2) If an auditor relies on an appointed actuary's review, the auditor's report prepared under section 16 of the Financial Reporting Act 1993 must summarise the extent to which the auditor has relied on the actuary's review.
(1) A licensed insurer must ensure that any specified actuary has access at all times to the accounting records and other documents of the insurer.
(2) A licensed insurer commits an offence if it fails to comply with subsection (1) and is liable, on summary conviction, to a fine not exceeding $1,000,000.
(3) A specified actuary is entitled to require from a director or an employee of the insurer such information and explanations as he or she thinks necessary for the performance of his or her duties as an actuary.
(4) A director or an employee commits an offence if he or she fails to comply with subsection (3) and is liable, on summary conviction, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $200,000 (or both).
(5) It is a defence to a director or an employee charged with an offence under subsection (4) if he or she proves that—
(a) he or she did not have the information required in his or her possession or under his or her control; or
(b) by reason of the position occupied by him or her or the duties assigned to him or her, he or she was unable to give the information or explanations required.
(6) In this section, specified actuary, in relation to a licensed insurer, means—
(a) an appointed actuary; or
(b) an actuary that is appointed under any of the provisions of this Act to investigate, or otherwise prepare a report in respect of, the insurer.
(1) A licensed insurer must ensure that, on or before the date on which the financial statements of the insurer and any group financial statements are required to be registered under the Financial Reporting Act 1993,—
(a) copies of those statements together with a copy of the auditor's report on those statements are given to the Bank; and
(b) a copy of the appointed actuary's report prepared under section 78 in respect of those statements is given to the Bank.
(2) A licensed insurer must, within 5 months after the end of the first half of each accounting period of the insurer,—
(a) prepare interim financial statements of the insurer for that half-period; and
(b) prepare interim group financial statements for a group comprising the insurer and its subsidiaries for that half-period; and
(c) ensure that copies of those statements together with a copy of the auditor's report on those statements (if any) are given—
(i) to the Bank; and
(ii) for registration to the Registrar (within the meaning of section 2(1) of the Financial Reporting Act 1993) if this is required by the regulations.
(3) The interim financial statements and interim group financial statements must—
(a) be audited if required by the regulations; and
(b) be prepared in accordance with requirements prescribed by the regulations (which may, for example, require compliance with generally accepted accounting practice (within the meaning of section 3 of the Financial Reporting Act 1993) in whole or in part and with any modifications, additions, or variations that may be prescribed).
(4) A licensed insurer commits an offence if it fails to comply with this section and is liable, on summary conviction, to a fine not exceeding $100,000.
(1) A life insurer must at all times have at least 1 statutory fund in respect of its life insurance business (but may have more statutory funds if it chooses to do so).
(2) A statutory fund is a fund that—
(a) is established in the records of a life insurer; and
(b) relates solely to the life insurance business of the life insurer or a particular part of that business.
(1) The principal requirements of this subpart in relation to statutory funds may be summarised as follows:
(a) all amounts received by a life insurer in respect of the business of a fund must be credited to the fund:
(b) all assets and investments related to the business of a fund must be included in the fund:
(c) all liabilities (including policy liabilities) of the life insurer arising out of the conduct of the business of a fund must be treated as liabilities of the fund:
(d) the assets of a fund are only available for expenditure related to the conduct of the business of the fund:
(e) funds may not be restructured or terminated without the approval of the Bank:
(f) profits and losses of a fund may only be dealt with in accordance with sections 110 to 113 and the associated regulations (the object of those sections and regulations being to ensure that such profits and losses are dealt with in a manner that protects the interests of policyholders and is consistent with prudent management of the fund).
(2) This section is only a guide to the general scheme and effect of this subpart.
(1) For the purposes of this Act, each of the following constitutes a life policy:
(a) a contract of insurance that provides for the payment of money on the death of a person or on the happening of a contingency dependent on the termination or continuance of human life:
(b) a contract of insurance that is subject to payment of premiums for a term dependent on the termination or continuance of human life:
(c) a contract of insurance that provides for the payment of an annuity for a term dependent on the continuance of human life:
(d) a contract of insurance that is, by its terms, to be of more than 1 year's duration and under which a benefit (other than a health insurance benefit) is payable in the event of—
(i) the death, by accident or by some other cause stated in the contract, of the person whose life is insured; or
(ii) injury to, or a disability of, the policyholder as a result of accident or sickness; or
(iii) the policyholder being found to have a stated condition or disease:
(e) a contract of insurance that constitutes an investment-linked contract (within the meaning of section 97).
(2) However, subsection (1) is subject to subsections (3) and (4) and section 85.
(3) A contract that provides for the payment of a benefit on the death of a person is not a life policy if,—
(a) by the terms of the contract, the duration of the contract is to be not more than 1 year; and
(b) payment is only to be made in the event of—
(i) death by accident; or
(ii) death resulting from a specified sickness.
(4) A contract of insurance is not a life policy if it is of a class declared by the regulations not to be life policies.
(1) This section applies to contracts of insurance that provide for both life insurance and non-life insurance.
(2) For the purposes of this subpart,—
(a) if the proportion of the premium that relates to life insurance is less than 25%, the contract of insurance must be treated as if it were not a life policy:
(b) if the proportion of the premium that relates to non-life insurance is less than 25%, the contract of insurance as a whole must be treated as if it were a life policy:
(c) in any other case,—
(i) to the extent that the contract of insurance relates to life insurance, it must be treated as being a life policy that is separate from the parts of the contract that do not relate to life insurance; and
(ii) to the extent that the contract of insurance relates to non-life insurance, it must be treated as being a contract of insurance that is separate from the life policy referred to in subparagraph (i); and
(iii) for the purposes of subparagraphs (i) and (ii), the insurer must fairly apportion the premium between those separate contracts.
(3) The proportion of the premium that relates to either life insurance or non-life insurance must be determined by the appointed actuary.
(4) This section is subject to section 84(3) and (4).
(5) In this section,—
life insurance means insurance of the kind described in section 84(1)(a) to (e)
non-life insurance means insurance that is not life insurance.
(1) In this subpart, unless the context otherwise requires,—
life insurance business means—
(a) business that consists of either or both of the following:
(i) the issuing of life policies:
(ii) the undertaking of liability under life policies; and
(b) any business that relates to business referred to in paragraph (a) (including, without limitation, business relating to the investment, administration, and management of the assets of a statutory fund)
policy document means a document that sets out, or the documents that together set out, the terms of a contract that is a life policy, and includes an endorsement on such a document
policy liability, in relation to a life insurer, means—
(a) a liability that has arisen under a life policy:
(b) a liability that, subject to the terms and conditions of a life policy, will arise on the happening of an event, or at a time, specified in the policy.
(2) A reference in this subpart to the business of a statutory fund of a life insurer is a reference to the life insurance business to which the fund relates.
(3) For the purposes of this subpart,—
(a) a liability (including a policy liability) is taken to be referable to the business of a statutory fund if the liability is of a kind that, under this subpart, may be discharged out of the assets of the fund:
(b) an expense is taken to be referable to the business of a statutory fund if the expense is of a kind that, under this subpart, may be met out of the assets of the fund:
(c) a life insurer issues a life policy when the insurer enters into the contract that constitutes the policy.
(1) In the investment, administration, and management of the assets of a statutory fund, a life insurer—
(a) must comply with this subpart; and
(b) must give priority to the interests of policyholders of life policies referable to the fund.
(2) In the event of conflict between the interests of policyholders of life policies referable to a statutory fund and the interests of shareholders or members of a life insurer, the life insurer must give priority to the interests of policyholders of those policies over the interests of shareholders or members.
(3) An act or decision of a life insurer in relation to a statutory fund does not contravene subsection (1)(b) if, having regard to the circumstances existing at the time of the act or decision, it is reasonable to believe that the act or decision gives priority to the interests of policyholders of life policies referable to the fund.
(4) An investment by a life insurer is not ineffective merely because it is made in contravention of subsection (1)(b).
(5) A reference in subsections (1) to (3) to the interests of policyholders of life policies referable to a statutory fund is a reference to the interests of those persons viewed as a group.
(6) Nothing in subsection (1) prevents a life insurer doing anything that the life insurer is permitted by this subpart to do.
(1) If a life insurer establishes a statutory fund otherwise than under an approval given under section 107 or 108, the life insurer must give the Bank written notice of—
(a) the establishment of the fund; and
(b) the date on which the fund was established; and
(c) the nature of the life insurance business of the life insurer to which the fund relates; and
(d) any other prescribed matters.
(2) The notice must be given in the prescribed manner.
(1) For the purposes of this Act, the assets of a statutory fund at a particular time are the following:
(a) the balance of money represented by amounts credited to the fund in accordance with section 91:
(b) assets of the life insurer obtained as a result of the expenditure or application of money credited to the fund:
(c) investments held by the life insurer as a result of the expenditure or application of money credited to the fund:
(d) other money, assets, or investments of the life insurer transferred to the fund, whether under this subpart or otherwise.
(2) Assets or investments obtained by the application of assets (other than money) of a statutory fund are themselves assets of the fund.
(3) A life insurer must keep assets of a statutory fund distinct and separate from assets of other statutory funds and from all other money, assets, or investments of the life insurer.
(4) Nothing in this subpart is intended to constitute a life insurer or the directors of a life insurer a trustee or trustees of the assets of the statutory funds of the life insurer.
(1) A policy document must specify the statutory fund or statutory funds to which the life policy is referable.
(2) A policy document must not make provision inconsistent with section 82.
(3) A provision in a policy document that a life policy is referable to 2 or more statutory funds is not effective unless it specifies—
(a) the benefits under the policy that are to be provided out of each fund; and
(b) either—
(i) the proportion of the premium that is related to the benefits to be provided out of each fund and is to be credited to the fund; or
(ii) the way in which that proportion is to be calculated.
(4) Subsection (1) does not prevent a policy document being endorsed so as to change the statutory fund or funds to which the life policy is referable.
(5) If a life policy was issued before the commencement of this section and, since that commencement, the life insurer that issued the policy has given the policyholder written notice of the statutory fund or funds to which the policy is referable, this subpart has effect as if the notice were part of the policy document relating to the policy.
(6) During the period of 6 months beginning at the commencement of this section, subsection (1) does not apply to the policy document relating to a life policy issued before the commencement of this section.
The following amounts must be credited by a life insurer to a statutory fund:
(a) premiums payable under life policies referable solely to the fund:
(b) in the case of a life policy that is referable to the fund and to 1 or more other statutory funds, the proportion of the premium that, by virtue of a provision in the policy document, is to be credited to the fund:
(c) amounts paid to the life insurer in relation to a liability under section 103 or 105 in relation to the fund:
(d) income from the investment of assets of the fund:
(e) money paid to or by the life insurer to the credit of the fund under a judgment of a court relating to any matter concerning the business of the fund or any failure to comply with this subpart in relation to the fund:
(f) any other money received by the life insurer in connection with its conduct of the business of the fund.
(1) Nothing in this subpart prevents a life insurer from making a capital payment to a statutory fund.
(2) For the purposes of this subpart, a life insurer makes a capital payment to a statutory fund if it credits to the fund an amount that—
(a) is not required to be credited to the fund; and
(b) does not represent any part of the assets of another statutory fund.
(1) A life insurer must not apply, or deal with, assets of a statutory fund, whether directly or indirectly, except in accordance with this section.
(2) The assets of a statutory fund may only be applied by the life insurer—
(a) to meet liabilities (including policy liabilities) or expenses incurred for the purposes of the business of the fund; or
(b) for the making of investments in accordance with section 98; or
(c) for the purposes of a distribution under section 112 or 113.
(3) A life insurer must not mortgage or charge any of the assets of a statutory fund except to secure a bank overdraft.
(4) A life insurer must not borrow money, for the purposes of the business of a statutory fund, by means of an unsecured borrowing if the result would be that the total amount of principal outstanding under unsecured borrowings for the purposes of the business of the fund would exceed an amount ascertained in the prescribed manner.
(5) In subsection (4), unsecured borrowing does not include—
(a) a borrowing of money by means of a bank overdraft; or
(b) a borrowing of money by means of a prescribed arrangement.
(6) The assets of a statutory fund are not available to meet a liability of a life insurer under a contract of guarantee unless—
(a) the contract of guarantee was entered into by the life insurer in connection with an investment by the life insurer of assets of the fund; and
(b) the investment was made in accordance with this subpart.
(7) Nothing in this section applies to the transfer of assets from one statutory fund to another in accordance with sections 107 to 109, or section 112 or 113.
(1) A life insurer fails to comply with this subpart if it engages in the practice of reinsurance between statutory funds of the life insurer.
(2) For the purposes of subsection (1), the practice of reinsurance between statutory funds consists of the following elements:
(a) part of the premium payable under a life policy referable to one statutory fund is credited to another statutory fund to which the policy is not referable (the reinsuring fund):
(b) a corresponding proportion of the liability under the life policy is treated as a liability for the discharge of which the assets of the reinsuring fund are available.
(1) A transaction (other than a transaction to which section 96 applies) entered into in contravention of section 93 is of no effect.
(2) Subsection (1) is subject to subsection (3) and section 87(4).
(3) The High Court, on application by a party to the transaction, may make an order declaring that the transaction is effective, and is to be taken always to have been effective, for all purposes.
(4) If the High Court is satisfied that the applicant entered into the transaction in good faith and without knowledge of the contravention of section 93, the court may have regard to any hardship that would be caused to the applicant if an order were not made under subsection (3).
(5) Subsection (4) does not limit the matters to which the High Court may have regard on an application under subsection (3).
(1) A transaction that is included in a class of transactions declared by the regulations to be transactions to which this section applies is not ineffective merely because it was entered into in contravention of section 93.
(2) The High Court, on application by the Bank, may make an order declaring that a particular transaction entered into in contravention of section 93 is, and is to be taken always to have been, of no effect for any purpose.
(3) The High Court must not make an order under subsection (2) if it is satisfied that the effect of the order (if made) would be to prejudice the rights of any person in respect of, or arising out of, the transaction that have been acquired in good faith and without knowledge of the contravention.
(1) This section applies to a statutory fund if—
(a) the business of the fund consists of the provision of investment-linked benefits; and
(b) any of the policies referable to the fund includes an investment performance guarantee.
(2) A life insurer must at all times ensure that the investment performance guarantee factor of a statutory fund to which this section applies does not exceed 5%.
(3) The investment performance guarantee factor of a statutory fund at a particular time is the proportion of the amount of the current policy liabilities of the fund at that time that represents the total cost, as at that time, of providing the investment performance guarantees included in life policies referable to the fund.
(4) For the purposes of this section,—
(a) the amount of the current policy liabilities of a statutory fund at a particular time is the amount that, in accordance with the regulations, is to be taken to be the value, at that time, of all policy liabilities of the life insurer in relation to policies referable to the fund; and
(b) the total cost, as at a particular time, of providing the investment performance guarantees included in policies referable to a statutory fund is the amount calculated, as at that time, in accordance with the regulations.
(5) In this section,—
investment-linked benefits means benefits payable under an investment-linked contract
investment-linked contract means a contract—
(a) the principal object of which is the provision of benefits calculated by reference to units the value of which is related to the market value of a specified class or group of assets of the party by whom the benefits are to be provided; and
(b) that provides for benefits to be paid—
(i) on death; or
(ii) on a specified date or specified dates or on death before the specified date, or the last of the specified dates, as the case may be
investment performance guarantee, in relation to a life policy, means a provision that the amount payable under the policy at a particular time by way of investment-linked benefits is not less than an amount specified in, or calculated in accordance with, the policy.
(1) A life insurer may invest the assets of a statutory fund in any way that is likely to further the business of the fund.
(2) However, subsection (1) is subject to the following qualifications:
(a) nothing in this subpart authorises a life insurer to make an investment the life insurer would otherwise be prohibited from making:
(b) nothing in this subpart authorises a life insurer to make an investment the life insurer would not otherwise have the power to make:
(c) except with the approval of the Bank, a life insurer must not invest assets of a statutory fund in an associated person that is not a subsidiary of the life insurer:
(d) a life insurer must not invest assets of a statutory fund, or keep assets of a statutory fund invested, in a subsidiary of the life insurer if the investment, or the retention of the investment, as the case requires, is prohibited by the regulations.
(3) Nothing in subsection (2)(c) or (d) prevents a life insurer investing assets of a statutory fund, or keeping assets of a statutory fund invested, in ordinary voting shares of public issuers that are associated persons of the life insurer (whether or not they are subsidiaries) if the value of the assets of the fund so invested does not exceed a prescribed percentage of the value of all assets of the fund.
(4) A transaction is not ineffective merely because it involves a contravention of subsection (2)(c) or (d).
(5) Nothing in this section—
(a) prevents a life insurer from investing money of a statutory fund by way of deposit with—
(i) a registered bank (within the meaning of the Reserve Bank of New Zealand Act 1989); or
(ii) a bank that is authorised to accept deposits under the law of an overseas jurisdiction; or
(b) requires the approval of the Bank for such an investment.
(6) For the purposes of this subpart, an investment by way of a loan is to be taken to be made when the loan agreement is entered into.
(7) In this section, public issuer means a person who is a party to a listing agreement with—
(a) a registered exchange (within the meaning of section 2(1) of the Securities Markets Act 1988); or
(b) a stock exchange in an overseas jurisdiction.
(1) A life insurer must, in the prescribed manner, keep a record of its restricted investments.
(2) In this section, restricted investment—
(a) means any investment of assets of a statutory fund of a life insurer in a related party; but
(b) does not include an investment of assets of a statutory fund by way of deposit with a registered bank (within the meaning of the Reserve Bank of New Zealand Act 1989), even though the bank is a related party of the life insurer concerned.
(1) A life insurer must not transfer an asset from one statutory fund to another statutory fund except in accordance with subsection (2), or sections 107 to 109, or section 112 or 113.
(2) A life insurer may transfer an asset from one statutory fund (the losing fund) to another statutory fund (the gaining fund) if—
(a) the life insurer transfers from the gaining fund to the losing fund an amount equal to the fair value of the asset; and
(b) in relation to the policyholders of life policies referable to the losing fund and the gaining fund, the transfer is fair and reasonable in all the circumstances.
(3) For the purposes of subsection (2), the fair value of an asset is the price a person could reasonably be expected to pay for the asset on a sale in which the seller and buyer were dealing with each other at arm’s length.
(4) Subsection (1) does not prevent a liquidator doing anything authorised or required by or under any enactment.
(1) A life insurer must not change the statutory fund or funds to which a life policy is referable, or terminate a statutory fund, except in accordance with sections 90(4) and 109 or section 107 or 108.
(2) Subsection (1) does not prevent a liquidator doing anything authorised or required by or under any enactment.
(1) The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank, make regulations that specify—
(a) what constitutes income of a statutory fund; and
(b) what constitutes outgoings of a statutory fund.
(2) If regulations are made for the purposes of subsection (1), then, for the purposes of this subpart,—
(a) what constitutes income of a statutory fund must be determined in accordance with the regulations; and
(b) what constitutes outgoings of a statutory fund must be determined in accordance with the regulations.
(1) A director of a life insurer has a duty to the policyholders of life policies referable to a statutory fund of the life insurer to take reasonable care, and use due diligence, to see that, in the investment, administration, and management of the assets of the fund, the life insurer—
(a) complies with this subpart; and
(b) gives priority to the interests of policyholders of life policies referable to the fund.
(2) In the event of conflict between the interests of policyholders of life policies referable to a statutory fund and the interests of shareholders or members of a life insurer, a director’s duty is to take reasonable care, and use due diligence, to see that the life insurer gives priority to the interests of policyholders of those policies over the interests of shareholders or members.
(3) A reference in subsection (1) or (2) to the interests of policyholders of life policies referable to a statutory fund is a reference to the interests of those persons viewed as a group.
(4) A director of a life insurer does not commit a breach of duty because of the doing of an act by the life insurer if the life insurer is permitted by or under this subpart to do the act.
(5) If, in respect of any act or omission of a life insurer, a director of the life insurer has failed to comply with subsection (1) and the act or omission of the life insurer results in a loss to a statutory fund of the life insurer, the director is liable to pay to the life insurer an amount equal to the amount of the loss.
(6) If 2 or more persons are liable under subsection (5) in relation to the same act or omission, the liability of those persons is joint and several.
(7) An action under subsection (5) may be brought—
(a) by the life insurer; or
(b) with the written approval of the Bank, by the policyholder of a life policy referable to the statutory fund involved.
(8) An approval under subsection (7)(b) may be given subject to conditions relating to the persons, or the number of persons, who may join in the action as plaintiffs.
(9) A person cannot be ordered to pay an amount under this section and under section 105 in respect of the same act or omission of a life insurer.
(10) This section applies despite anything to the contrary in the Companies Act 1993 or any other enactment (and the duties of a director of a life insurer specified under any other enactment are subject to this section).
(1) If a life insurer has failed to comply with this subpart, the Bank may give the life insurer a written notice requiring the life insurer, within a specified period, to take the action that is specified in the notice to remedy the failure.
(2) The period specified in the notice must be a period ending not earlier than 1 month after the giving of the notice.
(3) The action to be specified in the notice is the action that the Bank thinks appropriate and reasonable to overcome the effects of the failure to comply.
(4) At any time before the end of the period specified in the notice, the Bank may extend the period by any further period that the Bank thinks fit.
(5) A life insurer must comply with a notice under subsection (1).
(1) Subsection (2) applies if—
(a) the Bank has given a notice to a life insurer under section 104 in respect of a contravention of this subpart; and
(b) the contravention has resulted in a loss to a statutory fund; and
(c) the life insurer has failed to comply with the notice within the period specified in it or within that period as extended under section 104(4).
(2) The persons who were the directors of the life insurer when the contravention of this subpart occurred are jointly and severally liable to pay to the life insurer an amount equal to the amount of the loss.
(3) A person is not liable under subsection (2) if the person proves that he or she used due diligence to prevent the occurrence of the contravention or to ensure that the life insurer complied with the notice.
(1) If the Bank thinks that it is in the interests of the policyholders of life policies referable to a statutory fund to do so, the Bank may bring an action against a person in the name, and for the benefit, of a life insurer for the recovery of an amount that the life insurer is entitled to recover under section 105.
(2) In an action under subsection (1), the court may make any order in the matter as to costs and otherwise as it thinks fit.
(1) A life insurer may apply to the Bank to restructure its statutory funds by making 1 or more life policies that are referable to a statutory fund or funds of the life insurer become referable to another statutory fund or funds of the life insurer (whether existing or proposed).
(2) If the application is approved, the restructure may take place in accordance with any conditions that the Bank may impose.
(3) The conditions may include (without limitation) conditions relating to the following:
(a) a requirement to notify interested persons of the outcome of the application:
(b) matters connected with how the restructure takes place, including the following:
(i) life policies becoming referable to a receiving fund or funds:
(ii) policy liabilities and other liabilities becoming referable to a receiving fund or funds:
(iii) assets of a transferring fund becoming assets of a receiving fund or funds:
(iv) the timing of the restructure:
(v) if a receiving fund is a proposed new statutory fund, the establishment of that fund.
(4) The Bank must not approve the application if it considers that—
(a) the restructure will result in unfairness to the policyholders of life policies referable to a transferring fund or a receiving fund when those policyholders are viewed as a group; or
(b) immediately after the restructure,—
(i) the life insurer will fail to maintain a solvency margin in respect of a transferring fund; or
(ii) the life insurer will fail to maintain a solvency margin in respect of a receiving fund; or
(c) the life insurer is being liquidated or wound up when the application is made.
(5) Subsection (4)(b)(i) does not apply if the transferring fund is to be wound up.
(6) In this section,—
receiving fund means the fund, or each fund, to which the life policies will become referable after a restructure
transferring fund means the fund, or each fund, to which the life policies are referable before a restructure.
(1) A life insurer may apply to the Bank to terminate 1 or more of its statutory funds.
(2) If the application is approved, the termination may take place in accordance with any conditions that the Bank may impose.
(3) The conditions may include (without limitation) conditions relating to the following:
(a) a requirement to notify interested parties of the outcome of the application:
(b) matters connected with how the termination takes place, including the following:
(i) distribution or application of assets:
(ii) settling of liabilities:
(iii) the timing of the termination.
(4) The Bank must not approve the application if it considers that—
(a) the termination will result in unfairness to the policyholders of life policies referable to the fund or funds when those policyholders are viewed as a group; or
(b) the life insurer is being liquidated or wound up when the application is made.
(1) Subsection (2) applies if—
(a) a life insurer has more than 1 statutory fund; and
(b) because of an endorsement referred to in section 90(4), either—
(i) a life policy has ceased to be referable to one of those funds and become referable to another fund; or
(ii) a life policy referable to 1 or more of those funds has become referable to a further fund or funds.
(2) The life insurer must transfer to each fund to which the policy has become referable assets of a value equivalent to such part of the liabilities of the life insurer as is ascertained in the prescribed manner.
(3) If, because of an endorsement referred to in section 90(4), a life policy that is referable to a statutory fund becomes referable to another statutory fund, or a life policy that is referable to 1 statutory fund becomes referable to 2 or more statutory funds, the life insurer concerned must give notice to the policyholder of the policy in the prescribed manner.
(4) In this section, liabilities, in relation to a life insurer, means—
(a) policy liabilities; and
(b) reserves; and
(c) any other liabilities of the life insurer.
A life insurer must, in the prescribed circumstances and in the prescribed manner, allocate the operating profit or operating loss of a category of business of a statutory fund.
(1) A life insurer must allocate to shareholders’ or members' capital of a statutory fund all capital payments made to the fund under section 92.
(2) A life insurer allocates a capital payment by—
(a) identifying in its financial statements prepared as at the end of the period in which the payment was made the amount of the payment; and
(b) identifying that amount as an amount that should be added to shareholders’ or members' capital.
The distribution of retained profits of a statutory fund must be made in accordance with the prescribed requirements.
A distribution of shareholders’ or members' capital in relation to a statutory fund may be made only in accordance with the prescribed requirements.
(1) In a liquidation or other winding up of a life insurer, the assets of a statutory fund (the primary fund) must first be applied in discharging the following expenses, fees, and claims, in the order of priority in which they are listed:
(a) the fees and expenses properly incurred by the liquidator in carrying out the duties and exercising the powers of the liquidator, and the remuneration of the liquidator:
(b) the reasonable costs of a person who applied to a court for an order that the insurer be put into liquidation or wound up, including the reasonable costs incurred between lawyer and client in procuring the order:
(c) the actual out-of-pocket expenses necessarily incurred by any liquidation committee:
(d) to any creditor who protects, preserves the value of, or recovers assets of the insurer for the benefit of the insurer's creditors by the payment of money or the giving of an indemnity,—
(i) the amount received by the liquidator by the realisation of those assets, up to the value of that creditor's unsecured debt; and
(ii) the amount of the costs incurred by that creditor in protecting, preserving the value of, or recovering those assets.
(2) In this section, liquidator includes a person who is occupying the position of a liquidator of the insurer by whatever name called.
(3) Subsection (1) has effect only to the extent that expenses, fees, and claims are liabilities that are referable to the business of the primary fund.
(4) If any assets remain after the application of subsection (1), the assets must be applied according to the following rules:
(a) the assets are to be applied first in discharge of policy liabilities of the life insurer referable to the primary fund:
(b) if any assets remain, they are to be applied in discharge of other liabilities that are referable to the business of the primary fund:
(c) if, after the application of assets according to paragraphs (a) and (b), any assets of the primary fund remain, those assets are to be applied in such manner as the High Court directs:
(d) directions given for the purpose of paragraph (c) are to be the directions that the High Court considers equitable, having regard to—
(i) the interests of the policyholders of life policies referable to the primary fund; and
(ii) the interests of the policyholders of life policies referable to statutory funds of the life insurer other than the primary fund; and
(iii) the interests of creditors of the life insurer whose debts have not been discharged by the application of assets according to paragraph (b); and
(iv) the interests of shareholders or members of the life insurer.
(5) The reference in subsection (4)(d)(iii) to creditors of a life insurer is not limited to creditors to whom amounts are due in relation to the business of a statutory fund, but includes all creditors of a life insurer, whatever the nature of the liabilities involved.
(6) If a liability of the life insurer is referable to 2 or more statutory funds or is referable in part to a statutory fund but is also related to business, other than life insurance business, carried on by the insurer, the liquidator may apportion the liability so as to determine the part of the liability that is to be borne by each of the statutory funds or by the statutory fund, as the case may be.
(7) In making an apportionment under subsection (6), the liquidator must comply with any directions of the High Court.
(8) The part of the amount so determined in relation to a statutory fund is to be treated as a liability of the life insurer that is referable to the business of the fund.
(9) This section applies despite anything to the contrary in the Companies Act 1993.
(1) Subsection (2) applies if—
(a) a life insurer contravenes this subpart in relation to a statutory fund; and
(b) the contravention results in a loss to the statutory fund; and
(c) the life insurer has been put into liquidation or is otherwise being wound up.
(2) The persons who were the directors of the life insurer when the contravention occurred are jointly and severally liable to pay to the insurer an amount equal to the amount of the loss.
(3) A person is not liable under subsection (2) if the person proves that he or she used due diligence to prevent the occurrence of the contravention.
(4) On application by the liquidator of the licensed insurer, the High Court may order any person liable under subsection (2) to pay to the insurer the whole or any part of the loss.
(5) A person cannot be made liable both under this section and under sections 103 to 106 in respect of the same contravention.
(1) A life insurer commits an offence if it fails to comply with this subpart and is liable, on summary conviction, to a fine not exceeding $500,000.
(2) Section 212 (which relates to the liability of directors) does not apply in respect of an offence under this section.
(1) The Bank may, by notice to an overseas insurer, exempt the insurer (and its directors) from compliance with this subpart.
(2) The Bank must, before granting an exemption, be satisfied that—
(a) the overseas insurer is required, under the law or other regulatory requirements of the home jurisdiction of the insurer, to maintain, in respect of its life insurance business, a statutory fund or other arrangement for separating its life insurance obligations from its other obligations; and
(b) there is no overseas policyholder preference in relation to payments out of, or in respect of, the statutory fund or arrangement; and
(c) the nature and extent of prudential supervision that applies in respect of the statutory fund or arrangement is, in terms of achieving the purposes of this Act, at least as satisfactory as the nature and extent of prudential supervision that applies in respect of statutory funds under this subpart.
(3) This section is subject to section 228 (which provides for general provisions relating to exemptions).
The Bank must in accordance with this Part undertake prudential supervision of licensed insurers.
(1) For the purposes of this Act, the Bank may, by notice in writing to any licensed insurer, require the insurer to supply to the Bank any information, data, or forecasts about any matters relating to the business, operation, or management of the insurer.
(2) For the purposes of this Part, a reference to matters relating to the business, operation, or management of a person includes the corporate, financial, or prudential matters of the person.
(3) A licensed insurer may be required to supply information, data, or forecasts—
(a) relating to business carried on by the insurer in New Zealand or elsewhere (or both); and
(b) in a consolidated form (if specified by the Bank).
(4) The notice may specify—
(a) the periods for which, and the form in which, the information, data, or forecasts must be supplied; and
(b) the time by which, and the manner in which, the information, data, or forecasts must be supplied.
(5) The Bank may, by a subsequent notice, vary, revoke, or amend a notice.
(6) A licensed insurer commits an offence if the insurer fails to comply with any requirements of the Bank under this section and is liable, on summary conviction, to a fine not exceeding $500,000.
The Bank may, by notice under section 119, require a licensed insurer to supply information, data, or forecasts in relation to any associated person of the licensed insurer.
(1) An associated person of a licensed insurer must, on being required by the insurer to do so, supply the insurer with information, data, or forecasts relating to the person in order to enable the insurer to comply with a notice under section 119.
(2) A person commits an offence if the person fails to comply with this section and is liable, on summary conviction,—
(a) in the case of an individual, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $200,000 (or both):
(b) in the case of a body corporate, to a fine not exceeding $500,000.
(1) If the Bank has reasonable grounds to believe that a person has information, data, or forecasts that the Bank could require a licensed insurer to supply under section 119, it may, by notice in writing to the person, require the person to supply the information, data, or forecasts to the Bank.
(2) The notice may specify—
(a) the periods for which, and the form in which, the information, data, or forecasts must be supplied; and
(b) the time by which, and the manner in which, the information, data, or forecasts must be supplied.
(3) The Bank may, by a subsequent notice, vary, revoke, or amend a notice.
(4) A person commits an offence if the person fails to comply with any requirements of the Bank under this section and is liable, on summary conviction,—
(a) in the case of an individual, to a fine not exceeding $50,000:
(b) in the case of a body corporate, to a fine not exceeding $100,000.
(1) The Bank may, by notice in writing, require a licensed insurer or other person to obtain an audit or a review, by an auditor, actuary, or other person approved by the Bank, of any information, data, or forecasts that the insurer or other person, as the case may be, is required to supply under section 119 or 122.
(2) A licensed insurer or other person commits an offence if the insurer or person fails to comply with this section and is liable, on summary conviction,—
(a) in the case of an individual, to a fine not exceeding $50,000:
(b) in the case of a body corporate, to a fine not exceeding $100,000.
(1) The Bank may, by notice in writing to a licensed insurer, require the insurer to supply the Bank with a report or series of reports, prepared by a person approved by the Bank, on any matters relating to the business, operation, or management of either or both of the following:
(a) the insurer:
(b) any associated person of the insurer.
(2) An associated person of the licensed insurer must, if required to do so by the insurer, supply information relating to the person in order to enable the insurer to comply with a notice under this section.
(3) A licensed insurer or an associated person of the insurer commits an offence if the insurer or person fails to comply with this section and is liable, on summary conviction,—
(a) in the case of an individual, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $200,000 (or both):
(b) in the case of a body corporate, to a fine not exceeding $500,000.
Every person who holds office as required by any enactment, as an auditor of a licensed insurer or of an associated person of a licensed insurer or as an appointed actuary, must disclose to the Bank information relating to the affairs of the insurer or associated person obtained in the course of holding that office if, in the opinion of that person,—
(a) the licensed insurer or associated person—
(i) is insolvent or is likely to become insolvent; or
(ii) is in serious financial difficulties; or
(iii) is, or has been, operating fraudulently or recklessly; and
(b) the disclosure of that information is likely to assist, or be relevant to, the exercise by the Bank of its powers under this Act.
Every auditor or actuary must, before disclosing any information to the Bank under section 125, take reasonable steps to inform the licensed insurer or associated person of the intention to disclose the information and the nature of the information.
(1) No civil, criminal, or disciplinary proceedings lie against any auditor or actuary arising from the disclosure in good faith of information to the Bank under section 125.
(2) No tribunal, body, or authority having jurisdiction in respect of the professional conduct of any auditor or actuary may make any order against, or do any act in relation to, that person in respect of the disclosure referred to in subsection (1).
(3) No information received by the Bank under section 125 is admissible in evidence in any proceedings against the auditor or actuary concerned.
(4) Nothing in subsection (3) limits the admissibility of any information obtained in any other way.
(1) Subsection (2) applies if the Bank has reasonable cause to suspect that 1 or more of the following applies:
(a) a licensed insurer has failed, is failing, or is likely to fail to maintain a solvency margin:
(b) the business of a licensed insurer has not been, or is not being, conducted in a prudent manner:
(c) a licensed insurer has been or is operating fraudulently or recklessly:
(d) a licensed insurer or an associated person has failed to comply with any requirement to supply information, data, or forecasts under this Part, or any information or data supplied by the insurer or person under this Part is false or misleading in a material particular:
(e) a licensed insurer has failed, is failing, or is likely to fail to comply with any direction, condition, or any other requirement imposed by or under this Act or the regulations.
(2) The Bank may do either or both of the following if it considers it is reasonably necessary for the purposes of carrying out its functions and exercising its powers under this Act:
(a) by notice in writing to the licensed insurer or associated person, require the insurer or person to supply to the Bank, within the time specified in the notice, the information or data specified in the notice:
(b) appoint, in writing, any suitably qualified person (an investigator) to carry out an investigation of the affairs of the licensed insurer or associated person.
(3) A licensed insurer or an associated person commits an offence if the insurer or person fails to comply with any requirement of the Bank under subsection (2)(a) and is liable, on summary conviction,—
(a) in the case of an individual, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $200,000 (or both):
(b) in the case of a body corporate, to a fine not exceeding $500,000.
(1) An investigator may, for the purposes of carrying out an investigation of the affairs of a licensed insurer or an associated person,—
(a) by notice in writing, require the insurer or associated person, or any officer or employee of the insurer or associated person, or any other person, to—
(i) supply any information or data relating to the business, operation, or management of the insurer or associated person:
(ii) produce for inspection any documents of or relating to the business, operation, or management of the insurer or associated person that are in the custody or under the control of the insurer or associated person, officer, employee, or other person:
(iii) if necessary, reproduce in usable form any information recorded or stored in those documents:
(b) take copies of any documents produced for inspection under paragraph (a).
(2) An investigator who exercises any powers conferred by subsection (1) must, if requested, produce the instrument of the investigator's appointment.
(1) An investigator may, for the purposes of carrying out an investigation of the affairs of a licensed insurer or an associated person, enter and search any place if—
(a) the occupier of the place consents; or
(b) the investigator obtains a warrant under this section.
(2) A Judge of the High Court or a District Court Judge who is satisfied, on the application of the investigator, that there are reasonable grounds for believing that 1 or more of the following applies may issue a warrant to the investigator:
(a) that it is reasonably necessary for the purpose of determining whether to exercise any powers conferred on the Bank under this Act that an investigation of the affairs of a licensed insurer or an associated person should be carried out:
(b) that a licensed insurer or another person has failed to comply with any requirement to supply information, data, or forecasts under this Part, or any information, data, or forecasts supplied by the insurer or other person under this Part are false or misleading in a material particular:
(c) that a licensed insurer has failed, is failing, or is likely to fail to comply with any direction, condition, or other requirement imposed by or under this Act or the regulations.
(3) Schedule 2 applies for the purposes of this section.
(1) Every person commits an offence who—
(a) hinders, obstructs, or delays an investigator in the carrying out of an investigation under this Act; or
(b) fails to comply with any lawful requirement of an investigator.
(2) A person who commits an offence under this section is liable on summary conviction,—
(a) in the case of an individual, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $200,000 (or both):
(b) in the case of a body corporate, to a fine not exceeding $500,000.
In any case where it is declared in a final decision given in any proceedings in respect of the exercise of powers conferred by sections 128 and 129 that the exercise of any powers conferred by those sections is unlawful, to the extent to which the exercise of those powers is declared unlawful,—
(a) the Bank must ensure that as soon as is reasonably practicable after the decision of the court is given—
(i) any information or data supplied by the licensed insurer or person under section 128(2)(a) or 129(1)(a) is destroyed:
(ii) any documents or extracts from documents obtained pursuant to an inspection made under section 129(1)(a) are returned to the person previously having possession of those documents or previously having them under his or her control, and any copies of those documents or extracts are destroyed:
(iii) any information derived from or based upon any such information and data or documents or extracts is destroyed:
(b) no information or data supplied by the licensed insurer or person under section 128(2)(a) or 129(1)(a), and no documents or extracts from documents obtained under section 129(1)(a),—
(i) are admissible in evidence in any proceedings:
(ii) may be used in connection with the exercise of any power conferred by Part 4 or 5.
(1) This section applies to—
(a) information, data, and forecasts supplied or disclosed to or obtained by the following under, or for the purposes of, or in connection with the exercise of powers conferred by, this Act:
(i) the Bank; or
(ii) an investigator:
(b) information and data derived from or based upon information, data, and forecasts referred to in paragraph (a):
(c) information relating to the exercise, or possible exercise, of the powers conferred by this Act.
(2) The Bank may publish or disclose any information or data to which this section applies only if—
(a) the information or data is available to the public under any Act or is otherwise publicly available information; or
(b) the information or data is in a statistical or summary form; or
(c) the publication or disclosure of the information or data is for the purposes of, or in connection with, the performance or exercise of any function or power conferred by this Act or any other enactment; or
(d) the publication or disclosure of the information or data is to any authority or body in any other country that exercises functions that correspond with, or are similar to, those conferred on the Bank under this Act, and the Bank is satisfied that the information or data will only be used by that authority or body for the purpose of exercising those functions; or
(e) the publication or disclosure of the information or data is to any person that the Bank is satisfied has a proper interest in receiving the information; or
(f) the publication or disclosure of the information or data is with the consent of the person to whom the information relates or of the person to whom the information is confidential.
(3) The Bank must not publish or disclose information or data under subsection (2)(d) or (e) unless the Bank is satisfied that appropriate provision exists to protect the confidentiality of that information or data.
(4) An officer or employee of the Bank or an investigator must not publish or disclose any information or data to which this section applies except for the purposes of, or in connection with, the performance or exercise of any function or power conferred by this Act or any other enactment.
(5) An officer or employee of the Bank or an investigator commits an offence if the officer, employee, or investigator fails to comply with this section and is liable, on summary conviction, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $200,000 (or both).
(1) A person to whom any information or data is published or disclosed under section 133(2)(c), (e), or (f) must not publish, disclose, or use that information or data unless the publication, disclosure, or use is,—
(a) in the case of a publication or disclosure under section 133(2)(c),—
(i) for the purposes of, or in connection with, the exercise of powers conferred by this Act or any other enactment; and
(ii) in accordance with any conditions that may be imposed by the Bank:
(b) in the case of a publication or disclosure under section 133(2)(e),—
(i) authorised by the Bank and in accordance with any conditions that the Bank may have imposed; or
(ii) necessary or desirable for the performance or exercise of any function or power conferred by any enactment:
(c) in the case of a publication or disclosure under section 133(2)(f), in accordance with the terms and conditions of the consent referred to in that paragraph.
(2) A person commits an offence if the person fails to comply with this section and is liable, on summary conviction,—
(a) in the case of an individual, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $200,000 (or both):
(b) in the case of a body corporate, to a fine not exceeding $500,000.
Nothing in any Act, other than this Act or the Official Information Act 1982 or the Local Government Official Information and Meetings Act 1987, requires the Bank or any person to whom information or data has been published or disclosed under section 133 to make that information or data available to any other person.
(1) The Bank may give a licensed insurer a written direction to prepare a recovery plan if the Bank has reasonable grounds to believe that 1 or more of the following applies:
(a) the insurer has failed, is failing, or is likely to fail to maintain a solvency margin:
(b) the business of the insurer has not been, or is not being, conducted in a prudent manner:
(c) the insurer has failed, is failing, or is likely to fail to comply with any direction, condition, or other requirement imposed by or under this Act or the regulations.
(2) The recovery plan must—
(a) be in writing; and
(b) set out the actions that the licensed insurer will take to effectively address the matters that caused the Bank to give the direction and, in particular, to ensure that (as the case may be)—
(i) the insurer maintains its solvency margin and, in the case of a life insurer, the insurer also maintains the solvency margin or margins that apply in respect of its statutory funds:
(ii) the business of the insurer is conducted in a prudent manner:
(iii) the insurer comes back into compliance, or remains compliant with, any direction, condition, or other requirement referred to in subsection (1)(c); and
(c) set out an appropriate timetable for taking those actions to ensure that those actions are taken as soon as practicable; and
(d) describe the steps that the licensed insurer will take to ensure that the plan remains current, which must include procedures for regular review of the plan to systematically identify deficiencies in the effectiveness of the plan; and
(e) be appropriate to the operations of the licensed insurer, having regard to the size of the insurer, its corporate structure (including its relationship with associated persons), its funding structure, the market sector in which it operates, and its business strategy; and
(f) otherwise be prepared within the time and in the manner specified by the Bank in the direction; and
(g) be approved by the licensed insurer's governing body within the time specified by the Bank in the direction.
(3) The Bank may, in the direction, require the recovery plan to specify a final date (being a date that is satisfactory to the Bank) by which all of the actions referred to in subsection (2)(b) must have been taken and the outcomes in subsection (2)(b)(i), (ii), or (iii) achieved.
(4) The Bank may, in the direction, require the licensed insurer to obtain assistance in the preparation of the recovery plan from a person specified by the Bank.
(5) A direction given under this section must state the grounds on which it is given.
(1) The licensed insurer must, within the time specified by the Bank, provide a copy of the recovery plan to the Bank.
(2) The Bank must, after receiving the copy, inform the licensed insurer whether the Bank is satisfied that the plan meets the requirements in section 136(2) and (3).
(3) If the Bank is not satisfied that the recovery plan meets the requirements in section 136(2) or (3),—
(a) the Bank may require the licensed insurer to amend the plan and to resubmit the plan to the Bank for approval within any reasonable time that the Bank may specify; and
(b) the licensed insurer must comply with those requirements.
The licensed insurer must, after the recovery plan has been approved by the Bank, take all practicable steps to comply with the plan.
(1) A licensed insurer may amend its recovery plan only with the Bank's approval.
(2) If, at any time, the Bank is no longer satisfied that the recovery plan meets the requirements in section 136(2) or (3),—
(a) the Bank may require the licensed insurer to amend the plan in the manner specified by the Bank and to resubmit the plan to the Bank for approval within any reasonable time that the Bank may specify; and
(b) the licensed insurer must comply with those requirements.
A licensed insurer commits an offence if it fails to comply with any of sections 136 to 139 and is liable, on summary conviction, to a fine not exceeding $500,000.
(1) The Bank may give a licensed insurer a direction, in writing, if it has reasonable grounds to believe that 1 or more of the following apply:
(a) the insurer has failed, is failing, or is likely to fail to maintain a solvency margin:
(b) the business of the insurer has not been, or is not being, conducted in a prudent manner:
(c) the insurer, or a director or relevant officer of the insurer, has failed, is failing, or is likely to fail to comply with any direction, condition, or other requirement imposed by or under this Act or the regulations:
(d) the governance structure of the insurer has changed, since its licence was issued, in a manner that significantly reduces the extent to which it is appropriate (having regard to the matters specified in section 18(1)(h)):
(e) the insurer is an overseas insurer and an overseas supervisor has taken, or is taking, regulatory action against the insurer (whether or not that action has been completed):
(f) the insurer is an overseas insurer and the law, requirements, or supervision referred to in section 18(1)(i) has changed, since its licence was issued, in a manner that significantly reduces the extent to which that law, those requirements, or that supervision is appropriate (having regard to the matters specified in that paragraph).
(2) In this section, regulatory action means—
(a) action to cancel or suspend the licence, registration, or other authorisation of the insurer to act as an insurer (or action equivalent to cancelling or suspending such a licence, registration, or authorisation); or
(b) a direction to the insurer to the effect of 1 or more of the following:
(i) to take specified action to improve its solvency:
(ii) to cease to enter into new contracts of insurance:
(iii) to carry on its business, or any part of its business, in accordance with the direction:
(iv) to cease to carry on its business, or any part of its business, in accordance with the direction; or
(c) removing or replacing any directors or relevant officers of the insurer (whether by means of a direction or otherwise); or
(d) civil or criminal proceedings against the insurer.
(1) A direction given under section 141 may require a licensed insurer to—
(a) consult with the Bank, at the times and in the manner specified by the Bank, about the circumstances of the insurer and the actions or proposed actions of the insurer in respect of resolving any difficulties facing the insurer:
(b) cease entering into any new contracts of insurance (subject to subsection (2)):
(c) carry on its business, or any part of its business, in accordance with the direction:
(d) cease to carry on its business, or any part of its business, in accordance with the direction:
(e) take the action that is specified in the direction to address a failure, or potential failure, to comply with any direction, condition, or other requirement imposed by or under this Act or the regulations:
(f) ensure that any officer or employee of the insurer ceases to take part in the management or conduct of its business except with the permission of the Bank and so far as that permission extends:
(g) take the action that is specified in the direction to address any circumstances of financial difficulties.
(2) A direction must not require the licensed insurer to cease to enter into contracts of insurance by way of renewal of contracts of insurance that were originally entered into before the direction was given.
The Bank may give an associated person of a licensed insurer a written direction if it has reasonable grounds to believe that 1 or more of the following apply:
(a) the associated person, or a director or the chief executive officer of the associated person, has failed, is failing, or is likely to fail to comply with any direction or other requirement imposed by or under this Act or the regulations:
(b) the circumstances of the associated person are such as to be prejudicial to the solvency of the insurer or its ability to comply with this Act or the regulations:
(c) the affairs of the associated person are being conducted in a manner prejudicial to the solvency of the insurer or its ability to comply with this Act or the regulations.
A direction given under section 143 may require an associated person to—
(a) consult with the Bank, at the times and in the manner specified by the Bank, about the circumstances of the associated person and the actions or proposed actions of the associated person in respect of resolving any difficulties facing the associated person:
(b) take the action that is specified in the direction to address a failure, or potential failure, to comply with any direction or other requirement imposed by or under this Act or the regulations:
(c) ensure that any officer or employee of the associated person ceases to take part in the management or conduct of its business except with the permission of the Bank and so far as that permission extends:
(d) take the action that is specified in the direction to address any circumstances of financial difficulties.
(1) A direction given under this subpart must state the grounds on which it is given.
(2) The Bank may—
(a) amend or modify a direction; or
(b) replace a direction with another direction; or
(c) revoke a direction.
(1) A licensed insurer, or an associated person of a licensed insurer, that fails to comply with a direction under this subpart commits an offence.
(2) Every person commits an offence who, being an officer or employee of a licensed insurer or of an associated person of a licensed insurer, obstructs, hinders, or prevents the insurer or associated person from giving effect to a direction under this subpart.
(3) Every person who commits an offence under this section is liable on summary conviction,—
(a) in the case of an individual, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $200,000 (or both):
(b) in the case of a body corporate, to a fine not exceeding $500,000.
(1) This section applies if the Bank has reasonable grounds to believe that—
(a) any of the circumstances referred to in section 141(1) or 143 exists; and
(b) it is necessary to—
(i) remove or replace a director, an auditor, or an appointed actuary of a licensed insurer or of an associated person of a licensed insurer; or
(ii) appoint a person as a director, an auditor, or an appointed actuary of a licensed insurer or of an associated person of a licensed insurer.
(2) If this section applies, the Bank may—
(a) remove or replace a director, an auditor, or an appointed actuary of a licensed insurer or of an associated person of a licensed insurer; or
(b) appoint a person as a director, an auditor, or an appointed actuary of a licensed insurer or of an associated person of a licensed insurer.
(3) The Bank must—
(a) exercise a power referred to in subsection (2) by giving notice in writing to—
(i) the director, auditor, or actuary or the person being appointed; and
(ii) in the case of the removal, replacement, or appointment of a director, the Registrar of Companies; and
(b) give notice in writing of the exercise of that power to the licensed insurer or associated person.
(4) A notice given under subsection (3)(a)(ii) is sufficient compliance with section 159 of the Companies Act 1993 as long as, in the case of an appointment, the notice is accompanied by the form of consent and certificate required under section 152 of that Act.
(5) This section does not apply in respect of a director of an overseas person.
(6) This section has effect despite any enactment, rule of law, or the terms of the constitution of a licensed insurer or an associated person of a licensed insurer.
(1) Every person commits an offence who discloses that a direction has been given under subpart 1 or this subpart or that a notice has been given under section 147.
(2) Nothing in subsection (1) applies to the disclosure or publication of the fact that a direction or notice has been given if the disclosure or publication is made—
(a) to any director, relevant officer, or professional or financial adviser of the licensed insurer or associated person of a licensed insurer to which the direction or notice relates:
(b) with the written consent of the Bank, for the purposes of the sale or other disposition, or the possible sale or other disposition, of the whole or any part of the capital, or business undertaking, of the licensed insurer or associated person of a licensed insurer:
(c) by the Bank or with the written consent of the Bank,—
(i) to the public; or
(ii) to any person who has a proper interest in knowing that the direction or notice has been given.
(3) For the purposes of subsection (2)(b) and (c),—
(a) the Bank's consent must not be unreasonably withheld; and
(b) in considering whether to give its consent, the Bank must take into account the time that has elapsed since the direction or notice was given.
(4) Nothing in subsection (1) applies to the disclosure or publication of the fact that a direction has been given requiring the actions set out in section 142(1)(f) or 144(c) for the purpose of giving effect to that direction.
(5) Every person who commits an offence under this section is liable on summary conviction,—
(a) in the case of an individual, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $200,000 (or both):
(b) in the case of a body corporate, to a fine not exceeding $500,000.
(1) The Bank may, in the case of a licensed insurer that may be put into liquidation under or in accordance with the Companies Act 1993, apply to the High Court to appoint a liquidator for the insurer.
(2) The High Court may, on an application under subsection (1), appoint a liquidator for the licensed insurer if it is satisfied that—
(a) the insurer is unable to pay its debts (and, for that purpose, section 287 of the Companies Act 1993 applies with all necessary modifications whether or not the insurer is a company); or
(b) the insurer is failing to maintain a solvency margin; or
(c) the insurer has persistently or seriously failed to comply with any direction, condition, or other requirement imposed by or under this Act or the regulations; or
(d) it is just and equitable that the insurer be put into liquidation.
(3) The High Court may, on the application of the Bank, appoint a liquidator for a body corporate that may be put into liquidation under or in accordance with the Companies Act 1993 if it is satisfied that the body corporate is carrying on insurance business in New Zealand without holding a licence in breach of section 14.
(4) Subsection (3) does not limit subsections (1) and (2).
(5) Nothing in this section limits or affects any other enactment that provides for the winding up, liquidation, or dissolution of any body corporate or any class of body corporate.
(1) The High Court may, on the application of the Bank, reduce the value of 1 or more of a licensed insurer’s contracts of insurance if it is satisfied that 1 or more of the grounds specified in section 149(2)(a) to (d) apply.
(2) The High Court may order a reduction under this section on the terms and subject to the conditions (if any) that it thinks fit.
(3) The High Court may, for the purposes of this section, order the Bank to arrange for an independent actuary to prepare a report on the matters that the court thinks fit.
The Bank may apply under section 239L of the Companies Act 1993 for the appointment of an administrator for a licensed insurer that is a company.
(1) A liquidator may not be appointed under section 241(2)(a) or (b) of the Companies Act 1993 for a licensed insurer unless—
(a) a copy of the special resolution referred to in section 241(2)(a) is given to the Bank or the Bank is notified of the occurrence of the event referred to in section 241(2)(b) (as the case may be); and
(b) the Bank has given its written approval to the appointment.
(2) An administrator may not be appointed under section 239I of the Companies Act 1993 for a licensed insurer unless—
(a) a copy of the resolution referred to in that section is given to the Bank; and
(b) the Bank has given its written approval to the appointment.
(3) An appointment made in breach of subsection (1) or (2) is not valid.
(4) A request for the Bank to give its approval under this section must—
(a) be made in the manner that is specified by the Bank; and
(b) be accompanied by the prescribed fee (if any).
(5) A person that makes a request must provide to the Bank the information that is required by the Bank to assist it in determining whether to give its approval.
(1) If any person other than the Bank makes an application to the High Court to appoint a liquidator for a licensed insurer or otherwise for the winding up or dissolution of a licensed insurer or for the appointment of an administrator for a licensed insurer, the Bank may appear and be heard in relation to the application.
(2) If a licensed insurer is in voluntary administration, is subject to a deed of company arrangement, or is in liquidation under the Companies Act 1993,—
(a) the Bank may make an application under any of sections 239AM, 239ADB, 239ADD, 239ADO to 239ADQ, 239ADS to 239ADV, 239AER, 239AEU, 245A, 250, 271, 284, and 286 of that Act in respect of the insurer (and those sections apply, with all necessary modifications, as if the references to the persons who may make an application under those sections include a reference to the Bank); and
(b) the Bank may appear and be heard in relation to an application made by any other person under any of those sections in respect of the insurer.
(3) If a person makes an application under section 239ADR of the Companies Act 1993 in respect of a licensed insurer, the Bank may appear and be heard in relation to the application.
(1) If a compromise under section 228(1) of the Companies Act 1993 has been proposed in respect of a licensed insurer, the insurer must send to the Bank a copy of the notice, statement, and lists referred to in section 229(2) of that Act as soon as practicable after those documents are delivered for registration under that subsection.
(2) A licensed insurer that fails to comply with subsection (1) commits an offence and is liable, on summary conviction, to a fine not exceeding $100,000.
(3) If a person makes an application under section 232 or 236 of the Companies Act 1993 in respect of a licensed insurer, the Bank may appear and be heard in relation to the application.
(1) If a person (other than the Bank) makes an application to the High Court under any provision of Parts 14 to 16 of the Companies Act 1993 in respect of a licensed insurer, each of the following persons must take reasonable steps to ensure that a copy of the application (together with copies of any reports or other documents that are filed in the court in respect of the application) are sent to the Bank as soon as practicable:
(a) the insurer (unless it is in voluntary administration or liquidation or is subject to a deed of company arrangement):
(b) if the insurer is in voluntary administration or liquidation or subject to a deed of company arrangement, the administrator, liquidator, or deed administrator (as the case may be):
(c) the Registrar of the High Court in which the application is made.
(2) A licensed insurer commits an offence if it fails to comply with subsection (1) and is liable, on summary conviction, to a fine not exceeding $100,000.
(1) If a person is required to prepare a specified document in respect of a licensed insurer under any of sections 239AH, 239AI, 239ACP(1)(a), 239ACZ, 239ADY(a) and (c), 239ADZ, 239AEA, and 257(1)(a)(i) or (ii) of the Companies Act 1993, the person must send a copy of the document to the Bank as soon as practicable after it has been prepared.
(2) In subsection (1),—
prepare, in respect of a specified document, includes to lodge, send, file, or make the document
specified document means a report, an account, a deed, a notice, or a statement.
(3) The Bank may inspect any accounts or records kept by a liquidator of a licensed insurer under section 256(1)(a) of the Companies Act 1993.
(1) This section applies in respect of a licensed insurer that is—
(a) in voluntary administration; or
(b) subject to a deed of company arrangement; or
(c) in liquidation under the Companies Act 1993.
(2) The convenor of a specified meeting in respect of a licensed insurer must ensure that—
(a) the Bank receives the notices and communications relating to the meeting that a person who is entitled to attend the meeting is entitled to receive; and
(b) a representative of the Bank—
(i) is permitted to attend the meeting; and
(ii) may be heard at the meeting.
(3) In this section,—
convenor, in relation to a specified meeting, means an administrator, a deed administrator, a liquidator, or any other person that convenes, calls, or summons the meeting
specified meeting—
(a) means a meeting convened, called, or summoned under any of the provisions of section 239T, subparts 6 to 8 of Part 15A, and sections 239ADF, 243, 244, 258(2)(b) and (d), 314, and 315 of the Companies Act 1993; and
(b) includes—
(i) a meeting of a creditors' committee (within the meaning of section 239AR of the Companies Act 1993):
(ii) a meeting called as a result of a requirement under section 158.
(1) This section applies in respect of a licensed insurer that is in liquidation under the Companies Act 1993.
(2) At any time in the course of the liquidation, the Bank may, by notice in writing to the liquidator, require the liquidator to call a meeting of creditors or shareholders—
(a) to vote on a proposal that a liquidation committee for the purposes of section 315 of the Companies Act 1993 be appointed to act with the liquidator; and
(b) if it is so decided, to choose the members of the committee.
(3) The liquidator must comply with the requirement and section 314(4) to (6) of the Companies Act 1993 apply, with all necessary modifications, for the purposes of this section (except that section 314(4) is not subject to subsections (2) and (3) of that section).
(1) If an application has been made to the High Court to appoint a liquidator or an administrator for a licensed insurer, the court may, if it thinks fit, reduce the value of 1 or more of the insurer’s contracts of insurance instead of appointing the liquidator or administrator.
(2) The High Court may if it thinks fit, on the application of a liquidator or an administrator of a licensed insurer, reduce the value of 1 or more of the insurer’s contracts of insurance.
(3) The High Court may order a reduction under this section on the terms and subject to the conditions (if any) that it thinks fit.
(4) A liquidator or an administrator who makes an application under subsection (2) must provide a copy of the application to the Bank as soon as practicable after it is filed.
(5) The Bank is entitled to attend and be heard in any proceedings under this section.
(1) The High Court may, for the purposes of section 159, order a licensed insurer, a liquidator, an administrator, or another person that is a party to the proceedings to arrange for an independent actuary to prepare a report on the matters that the court thinks fit, and to make any order in the matter as to costs and otherwise as it thinks fit.
(2) The person that arranges for an independent actuary to prepare the report must ensure that a copy is provided to the Bank as soon as practicable after it is prepared.
(1) This section applies in relation to the liquidation of a life insurer under the Companies Act 1993.
(2) The liquidator must carry on the life insurer’s business so far as it consists of continuing the insurer’s life policies with a view to that part of the business being transferred as a going concern to a person who may lawfully continue those life policies.
(3) Subsection (2) applies unless the High Court orders otherwise.
(4) In continuing the business, the liquidator—
(a) may agree to the variation of any life policies in existence when the liquidator is appointed; but
(b) must not enter into any new life policies.
(5) The High Court may, on the application of the Bank or a liquidator, appoint an independent actuary to investigate the life insurer’s business so far as it consists of continuing its life policies and to report to the Bank and liquidator—
(a) on the desirability or otherwise of that part of the insurer’s business being continued; and
(b) on any reduction in the life policies effected by the insurer that may be necessary for successful continuation of that part of the insurer’s business.
(6) Nothing in Schedule 6 of the Companies Act 1993 limits this section.
(1) The liquidator or deed administrator of a licensed insurer may apply to the High Court for approval of a scheme under which all or part of the insurer's insurance business is transferred to another person (the transferee).
(2) An application under subsection (1) must contain, or be accompanied by, a scheme for the proposed transfer that sets out—