Insurance (Prudential Supervision) Bill

  • enacted

Insurance (Prudential Supervision) Bill

Government Bill

95—2

As reported from the Finance and Expenditure Committee

Commentary

Recommendation

The Finance and Expenditure Committee has examined the Insurance (Prudential Supervision) Bill and recommends that it be passed with the amendments shown.

Introduction

The Insurance (Prudential Supervision) Bill seeks to reform and extend prudential supervision to cover the insurance industry. It would establish a system for licensing insurers, impose prudential requirements on insurers, provide for the supervision of compliance with those requirements by the Reserve Bank, and confer certain powers on the Reserve Bank to act in respect of insurers in financial or other difficulties.

The bill is intended to cover most entities that undertake insurance business in New Zealand, including life insurers, health insurers, captive insurers, re-insurers, and the insurance activities of incorporated societies. However, we are recommending that “discretionary mutual organisations” and trade or professional associations not be covered by the bill. This is discussed further below.

This commentary deals only with the substantive amendments we recommend to the bill; it does not discuss proposed technical, consequential, or minor drafting amendments.

Licensing of insurers

Definitions of “contract of insurance” and “carrying on insurance business in New Zealand”

We recommend the deletion of clause 7(3) in order to clarify the application of the bill. The definition of “contract of insurance” in clause 7 is critical to the bill, and should be as clear as possible in its intent. In the bill as introduced, this subclause could be confusing for insurers as it could be interpreted to contradict subclause 7(1), and might widen the application of the bill beyond that which is currently considered to constitute insurance. Deleting the subclause would also result in the exemption of discretionary mutual organisations, which we consider accords with the policy intent of the bill. The exclusion of discretionary mutuals from the regime is discussed below.

We also recommend the inclusion of new clause 8(1)(a)(iia) to make it clearer that the definition of carrying on insurance business in New Zealand includes overseas persons that are not bodies corporate. In the bill as introduced, this clause would make the bill apply to all forms of legal entity (including credit unions, friendly societies, and other mutuals) and partnerships formed in New Zealand, though the status of an overseas person that was not a body corporate would be unclear. Our amendment would recognise that associations of persons formed outside New Zealand may be carrying on insurance business in New Zealand, meaning that they could be captured by the regime.

Exemptions for certain types of insurers

We recommend the insertion of new clause 229A to provide for regulations to be made exempting existing “small” insurers from certain requirements of the bill: financial strength ratings, statutory funds requirements, some requirements relating to financial reporting, and minimum capital requirements. Whilst these requirements would not apply to small insurers, other requirements of the bill would, including obtaining a licence, meeting fit and proper standards, risk management requirements, and appointing an actuary. We also recommend there be sufficient flexibility in the bill to apply special conditions of licence to small insurers on matters such as solvency. We consider that “small” insurers should be defined by the amount of their annual gross premium income; this amount would be specified in regulations, and is likely to be between $1 million and $1.5 million.

We are recommending the establishment of a graduated regime for small insurers because such entities could find a number of requirements in the full regime particularly onerous, to the point that it might put their viability at serious risk; and because no real benefit would be gained from applying the entire regime to small insurers. For this reason, we believe concessions to small existing insurers are justifiable. We also recommend that small insurers who become established after the passage of the bill into law not have access to this framework, unless they are friendly societies. This is in recognition of the Friendly Societies and Credit Union Act 1982, under which such insurers can form.

For similar reasons, we also recommend that clause 8 be amended to exclude from coverage voluntary professional and trade organisations providing some insurance-type services to their members. Our proposed deletion of clause 7(3) would also provide exemptions to organisations offering discretionary benefits, which we consider should not be captured by the regime.

We propose the insertion of clause 8A, which would empower the Reserve Bank to declare that a person was not carrying on an insurance business in New Zealand where the person entered into a one-off or occasional contract of insurance and the bill’s requirements would be unduly onerous. This would allow the Reserve Bank to grant exemptions to persons entering into one-off insurance contracts that were secondary to their core business, which are not intended to be captured. After careful consideration, we recommend that declarations under this provision be subject to the Regulations (Disallowance) Act 1989, and recommend amendments to clause 228 accordingly. While we are assured that the Reserve Bank would put appropriate restrictions on the provision to ensure these declarations were not employed too widely, we consider that as they could cover a wide range of situations and it involves a power in the nature of an exemption, it should therefore be subject to disallowance by Parliament.

We considered carefully requests for complete or partial exemption from various kinds of other insurers, such as captive insurers and incorporated societies, including those entities that, while owned or controlled by professional or trade associations, are first and foremost insurance entities. However, we acknowledge that the bill is intended to capture all kinds of insurers to ensure they are subject to the same rules, and believe that size, rather than corporate form, should be the relevant criterion for exemption in order to make the regime workable. We therefore consider it would be inappropriate to exempt some forms of insurers and not others.

We are advised, however, that the three-year transition period available to insurers upon enactment of the bill would allow such entities ample opportunity to make changes to their business, structure, or other arrangements to enable them to comply with the regime. The Reserve Bank assured us that it would communicate with each insurer affected by the legislation, and could provide advice to insurers on these issues, should they require it.

Treatment of overseas insurers operating in New Zealand

We considered carefully the effect of the bill on New Zealand insurers and overseas insurers, in response to concern that the proposed framework might unintentionally put New Zealand-owned insurers at a disadvantage, and the suggestion that more consistency was needed with overseas jurisdictions’ prudential frameworks, particularly that of Australia. We are assured, however, that the regime proposed in the bill would not disadvantage New Zealand insurers.

In the bill as introduced, three clauses relate to exemptions for overseas insurers operating branches in New Zealand. Clause 36 allows the Reserve Bank to give exemptions in relation to “fit and proper” certificates for overseas directors, clause 60 allows exemptions from solvency standards, and clause 117 provides for exemptions from statutory fund requirements. These exemptions would be granted only if insurers operating branches in New Zealand were subject in their “home” jurisdiction to regulation that met the standards of the Reserve Bank; their standards would also, taken as a whole, have to be equivalent to New Zealand’s.

Exemptions provided to overseas insurers in these circumstances would confer no advantages relative to New Zealand insurers, because standards or requirements in the original jurisdiction comparable with New Zealand’s would be a condition of such exemption. Indeed, the exemptions would simply ensure that no duplication of regulation applied to overseas insurers operating in New Zealand. We believe that the alternative—excluding overseas insurers entirely from the bill—would not be appropriate, as it would leave them with no regulatory oversight in New Zealand; this is contrary to the intention of the bill, and would be more likely to confer advantages on overseas insurers relative to New Zealand ones. Excluding overseas insurers from selling insurance through their New Zealand branches would also reduce competition, and New Zealanders’ access to insurance.

We were advised that duplication of the Australian prudential framework in its entirety would be inappropriate, because New Zealand’s market has different requirements for supervision in some areas. Nevertheless, New Zealand’s framework draws heavily on Australia’s in some aspects, because of the similarities between the two countries, the number of insurers undertaking business in both countries, and Australia’s well-developed prudential regime. New Zealand’s framework would be tougher in some areas than Australia’s, but Australia’s would be tougher in others. For example, it is proposed that the New Zealand regime have higher risk-weights for unlisted equity investments, while Australia has much higher minimum capital requirements.

Because of certain grounds for exemptions discussed earlier, there was concern that the bill might create ambiguity in some areas, for example regarding solvency standards, where the standard of an overseas jurisdiction may be slightly lower than New Zealand’s, possibly causing uncertainty or unfairness. However, we are assured by the Reserve Bank that it would make careful judgements when considering these matters, and that the transition time for compliance with the legislation would allow enough flexibility for these issues to be resolved.

However, we recommend an amendment to the bill in relation to overseas insurers. Because clause 18(1)(i) sets out criteria for the Reserve Bank to use to determine whether the home-jurisdiction prudential regulation and supervision of an overseas insurer was satisfactory, we consider that the regulations (made under clause 229) should prescribe in advance a list of overseas jurisdictions that are considered to regulate and supervise insurers satisfactorily to the level set out in the paragraph. This amendment would reduce uncertainty for insurers, and make the process less costly and more straightforward. The provisions in the bill as introduced could be interpreted to mean that the Reserve Bank would have to make a determination regarding the suitability of the jurisdiction in respect of each overseas insurer that applies for a licence, even when it had already considered another applicant from the same jurisdiction. We do not believe this would be an effective use of the Reserve Bank’s time and resources. Similar amendments are also proposed to clauses 36(2A) and 117(2A).

Obtaining a licence

We recommend some minor amendments to the provisions governing the obtaining of an insurance licence. We recommend amending clause 16 to make it clear that only bodies corporate carrying on or proposing to carry on an insurance business in New Zealand are eligible to apply for a licence. This would make the criteria for licensing more explicit. It would also prevent overseas insurers from using New Zealand registration as a shelter for their overseas activities.

We propose some small amendments to clause 18(1). They would make it clear that the Reserve Bank must be satisfied that an applicant held capital of an amount specified in the solvency standard before that applicant was entitled to a licence. As one of the criteria for eligibility for a licence is a specified minimum amount of capital, we consider it important that the subclause refer to this requirement. We also propose an amendment to subclause (1)(j) to ensure that insurers that were not required to register under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 would still be required to meet the standards set out in section 13(a) of that Act. These standards are an important factor in licensing decisions, and we consider that they should therefore also apply to entities that are not covered by the Act. We also recommend the removal of the reference to section 13(b) of the Financial Service Providers Act, because it is not relevant.

Licence conditions

We recommend amending clause 20 to ensure that a solvency margin can be expressed in different ways, for example as an amount or as a ratio. This amendment is aimed at ensuring the provisions are workable for insurers, and that they are as easy to apply as possible. This clause is important because many of the thresholds for coercive action by the Reserve Bank relate to inability to maintain a solvency margin. We consider this amendment would help make sure the provision is effective.

We also recommend an amendment to clause 23(1) to clarify how and within what time a licensed insurer would have to inform the Reserve Bank if they believed they might fail to maintain a solvency margin. In the bill as introduced, the requirements and related timeframe are unclear; it says that the Reserve Bank must be informed “as soon as practicable” if an insurer is likely to fail “at any future time”. Accordingly, we propose the requirement that the Reserve Bank be informed as soon as reasonably practicable if a licensed insurer believes a failure to meet a solvency margin is likely within the next three years.

Notifying the Reserve Bank before obtaining control or changing corporate form

We recommend amendments to clauses 25 to 27 to clarify that the person who intended to obtain the control would be the person responsible for informing the Reserve Bank about a change of control transaction, and to clarify what constitutes obtaining control. We propose that the duty should apply if a person was to become the “holding entity” of the insurer (which draws on sections 5 to 8 of the Companies Act 1993) or would (either alone or with others) obtain control over 50 percent or more of the voting rights in the insurer. The drafting of these clauses as introduced is unclear, especially as to who is the controlling owner and who must inform the Reserve Bank about the proposed change in control.

Fit and proper requirements

We recommend removing the detail in clauses 32(4) and 34 and allowing it to be specified by deemed regulation. Clause 32(4) includes the detailed requirements for assessing “fit and proper” persons, and clause 34 sets out some criteria for this purpose. Allowing this to be specified by deemed regulation would avoid any undue inflexibility resulting from enshrining the detail in legislation. Much of the detail of clause 34 is very prescriptive, and is more appropriate to be included in deemed regulations (“fit and proper standards”) where there is more scope for flexibility and variation. We consider that these standards should be subject to the Regulations (Disallowance) Act.

Transfers and amalgamations

We recommend an amendment to clause 44(1) to allow other suitably qualified persons to assist the Reserve Bank in making its assessment of a proposed transfer or amalgamation. As introduced, the subclause refers only to an independent actuary. While we consider that the opinion of an actuary would be the most relevant, we believe there would be merit in allowing other suitably qualified persons, such as accountants, to assist where the Reserve Bank considers it appropriate.

We also recommend an amendment to clause 45(1) to ensure it is clear that the Reserve Bank could obtain only reasonable costs from an insurer in relation to a report the bank had itself requested regarding approval for a transfer or amalgamation. This should reassure insurers that costs in this area are not intended to be excessive.

Lastly, we recommend an amendment to clause 47 to specify a time limit for the Reserve Bank of 20 working days from the day all reasonably required information is received regarding transfer or amalgamation applications. We believe that the requirement to secure approval should not obstruct legitimate transfers or amalgamations. No time limit is specified in the bill as introduced, and we believe that 20 working days should be sufficient.

Prudential regulations

Solvency standards

We recommend that clause 56 be widened to include some reporting against matters in the solvency standards that are not covered by reports produced under the Financial Reporting Act 1993. Broadening these provisions to allow the standards to require reports relating to solvency would ensure that all matters relating to solvency were taken into account in reporting. We also recommend that the clause be amended to allow the solvency standard to prescribe matters relating to minimum capital. Although the concept of minimum capital may be captured within the current formulation of solvency margin, our amendment would confirm this and provide the Reserve Bank with the means to impose solvency requirements. Solvency standards would be subject to the Regulations (Disallowance) Act. We also recommend amending clause 56 to make it clear that the solvency standard could cover disclosure matters and some reporting to the Reserve Bank and others in relation to solvency matters, and that offences would apply to breaches of these requirements. We consider this amendment necessary as the provision must encompass all matters that may be included in the solvency standard.

Because the Reserve Bank has completed substantial consultation on solvency standards, we also recommend that clause 228C, which requires such consultation before a solvency standard is issued, be amended to require consultation before the bill is passed to be treated as having been undertaken by the Reserve Bank for the purpose of this clause.

While we do not have responsibility for the content of the regulations, we urge the Reserve Bank to ensure that solvency standards are fair. As explained earlier, solvency standards would be subject to the Regulations (Disallowance) Act. To that end, we recommend the insertion of new subclauses 53(3A) and 53(3B) which require the Reserve Bank, before issuing a solvency standard, to have regard to relevant overseas standards.

Some of us consider this is the minimum necessary to provide some reassurance to New Zealand-based insurers that the Reserve Bank will be closely watching issues posed by differing solvency standards applicable to insurance companies not incorporated in New Zealand.

Financial strength ratings

We recommend that clause 61(2)(b) be amended to clarify that the reference to insurance business carried on by a reinsurer means an insurance business in New Zealand.

We also recommend a number of other small amendments regarding financial strength ratings provisions. We recommend that the bill be amended to require that a financial strength rating given by an approved ratings agency must refer to any overseas policyholder preference, as this is the intention. We also recommend that clauses 64 and 65 be amended to allow disclosure of a rating by an insurer through an intermediary. This would avoid further compliance costs and maintain continuity with the status quo.1 We also recommend that clauses 64 and 65 be amended to impose a maximum penalty of $100,000, rather than the maximum $500,000 set out in clause 71, for breaching either of the clauses. We believe $500,000 is excessive and unwarranted in the context of the bill, and that $100,000 would be far more appropriate to these offences.

We also recommend two further amendments to clause 69. We recommend amending this clause to allow the insurer the option of using public notice of ratings downgrades as an alternative to formal written notice to all policyholders, which is the only option in the bill as introduced. We believe that this option could reduce compliance costs for insurers, while still ensuring that information relating to a change in rating was made public. We also recommend that the clause be amended to clarify that the requirement to give notice of a public downgrade of a rating would apply to all contracts, not just those with a duration of more than one year. This amendment would reflect the status quo under the Insurance Companies (Ratings and Inspections) Act 1994, and would be easier to comply with if our recommended amendment to allow public notice of a ratings downgrade were implemented.

Risk management plans

We recommend an amendment to clause 73 to allow, in extreme market circumstances only, notification to the Reserve Bank of a change to an insurer’s risk management plan after the change has been made. This amendment would require the insurer to notify the Reserve Bank as soon as possible after the change occurred, rather than to have the change pre-approved. We considered submissions advocating the removal of the requirement that the Reserve Bank pre-approve any change to a risk management plan; however, regulatory awareness and pre-approval of plans are important components of the prudential framework; in addition, such a move would open up the possibility of unwinding poorly-founded risk positions. Nonetheless, we are aware that in extreme circumstances immediate action on a plan could be needed, so we consider that the bill should provide for flexibility for an insurer to act quickly. Our proposed amendment would do so, while retaining the requirement for pre-approval in all other circumstances.

Appointment of actuary and actuarial review

We recommend amending clause 76(3) to allow insurers more time to appoint a new actuary if the Reserve Bank allows an extension. The clause as introduced allows six weeks for an insurer to make the new appointment; however, we believe that this should be extended to allow flexibility where an insurer could not meet the six-week deadline for good reason.

Finally, we recommend the deletion of clause 79(2), which requires the auditor’s report to indicate the degree of reliance that has been placed on the actuarial report. We believe that this subclause might be misunderstood as a qualification of the auditor’s opinion, and could therefore affect how the auditor’s report was viewed.

Supply of financial statements

We recommend amendments to clause 81 to clarify some drafting issues. We recommend the insertion of new subclause 2A to make it clear that the definition of “subsidiaries” refers to the definition in section 2(1) of the Financial Reporting Act. We also recommend that subclause (3) be amended to require interim financial statements to be prepared according to generally accepted accounting practice (GAAP)—that is, the same way that yearly financial statements are prepared. The bill as introduced provides an option of using a basis other than GAAP, which we consider should be removed.

Statutory funds of life insurers

General requirements

We recommend a number of amendments to clause 84 to ensure consistency in the terminology used throughout the bill. Our amendments would replace the word “policyholder” in subclauses (1)(d)(ii) and (iii) with “insured person”. This would also clarify that the intended focus of the clause is on an insured person, rather than a policyholder. Further, we recommend that the phrase “specified sickness” in subclause (3)(b)(ii) be replaced with the phrase “stated condition or disease” for consistency with subclause (1)(d)(iii).

We recommend a further amendment to clause 84(1) to correct an omission. We propose including investment account contracts in the definition of a life policy, as such contracts are still in existence and so should be captured by the bill.

We recommend that clause 85 be amended to ensure that classification of composite policies into life and non-life policies is applied on a class of contract basis and according to the premium apportionment at the commencement of a contract. This amendment would allow these clauses to be applied more consistently.

We recommend an amendment to clause 90(6) to change the transition time for insurers. Clause 90(6) provides that during the six months from the commencement of the clause, subclause (1) (which specifies that a policy document must identify the statutory fund or funds to which a life policy is referable) would not apply to a policy document relating to a life policy issued before the commencement of the clause. To ease the transition for insurers, we consider that the period should be increased to 12 months, so that insurers could capture every policy in their annual cycle.

We also recommend amendments to clause 97 of the bill, which relates to the limit of certain liabilities regarding investment performance guarantees. This clause is copied from Australian legislation, and is highly technical. We are aware of concern that the provision is difficult to interpret in places, and that some aspects of it are uncertain. We consider it appropriate to enable regulations to be made providing this detail, rather than providing it in primary legislation.

We propose one other amendment to clause 103(10). To provide assurance and clarity for directors, we consider that it should be made clear that compliance with directors’ duties to life policyholders would not put a director in breach of any other duty under the Companies Act or related obligations.

Transfer of assets on establishment of statutory funds

To rectify an omission, we recommend that new clauses 88A and 91(ab) be inserted to provide for the transfer of assets upon the establishment of a statutory fund.

Application of statutory fund assets on liquidation or winding up

We recommend an amendment to clause 114(4) to allow the allocation of funds of an insolvent life insurer by direction of the High Court in cases where the statutory fund is insufficient to meet policyholder liabilities in full. In the bill as introduced, no direction is given for such situations; we consider it important to clarify this point to ensure certainty about the process if the situation arises.

Prudential supervision

Disclosure of information by auditors and actuaries

We recommend two amendments to clause 125. For practical reasons, we recommend extending the clause to require past as well as present office-holders to disclose information about an insurer’s solvency and whether it may be operating fraudulently. We also recommend replacing references in the clause to “insolvency” with references to “failing to maintain a solvency margin”. This would link the clause clearly to the solvency margin imposed by condition of licence, as originally intended, rather than to actual solvency.

Confidentiality of information

We recommend amending clause 133 to ensure consistency between its subclauses. As introduced, subclause (1) refers to “information, data or forecasts”, and (2) refers only to information or data. We consider that the clause should be amended to refer consistently to data, information, forecasts, and documents. This amendment would also tighten up the confidentiality protections covering commercially sensitive information provided to the Reserve Bank.

Distress management

Recovery plans

We recommend amendments to clause 141 to require the Reserve Bank to consider whether a recovery plan should be requested in the particular circumstances before issuing a direction. This amendment would reflect the intention that a recovery plan should often be the first step in the distress management process, which can later be escalated to issuing directions or more serious measures. Because the Reserve Bank may need to act quickly in crises, however, we do not believe recovery plans should be a mandatory first step in the process.

Directions

We recommend amending clause 142 so that various paragraphs in subclauses (1) and (2) are better aligned. These subclauses appear to contradict each other in the bill as introduced, as subclause (1)(d), for example, states that a direction may require a licensed insurer to cease to carry on its business or any part of its business, while subclause (2) instructs that a direction must not require the licensed insurer to cease to enter into contracts of insurance by way of renewal of contracts that were originally entered into before the direction was given. We therefore propose that subclause (2) begin with “However”, rather than “A”, to make it clear that subclause (1) is subject to subclause (2).

Other matters

Other definitions

For clarification purposes, we recommend an amendment to clause 6 to make it clear that the financial strength rating refers only to the ability to meet liabilities under contracts of insurance. We are aware that there is some confusion over whether a financial strength rating refers to all liabilities rather than insurance policy liabilities only, so we consider that this clause needs to make it clear that the rating requirement is for financial strength and not for a credit rating.

Miscellaneous provisions

We recommend a number of small amendments to the provisions relating to Lloyd’s (clauses 198 to 208) to clarify the respective obligations of Lloyd’s and Lloyd’s underwriters under the bill, to ensure that they can comply with the bill, and to allow Lloyd’s to be given a temporary licence pending the consideration of an application for a full licence. We also recommend that the provisions governing the application of the bill to Lloyd’s include a caveat in clause 203A(4) stating that Lloyd’s licence can be cancelled if it persistently or seriously breaches its obligations under the bill. The bill needs to include appropriate mechanisms to promote compliance by all insurers, including Lloyd’s. We consider that, in the case of Lloyd’s, cancellation is an appropriate mechanism. For similar reasons, we also consider that the bill should specify that there would be a sanction against Lloyd’s if a Lloyd’s underwriter were to enter into new insurance contracts in New Zealand following a direction under clause 205 not to do so.

We also recommend amending clause 217 to make it clear that if an insurer had a prohibited provision in its constitution allowing it to act in the best interests of its holding company even though it may not be in the best interests of the insurer, this is not deemed to be an offence, and deleting subclause (4) (detailing the fine for non-compliance). Clause 217 states that it is an offence for an insurer to have such a provision in its constitution. We consider that it would be better for non-complying insurers that the offending provision in their constitution should have no legal effect. This clause should also make it clear that it would apply only to New Zealand-incorporated companies.

Finally, we recommend amending clause 236 to include a reference to the ratings provisions in the bill as well as certain requirements under the Financial Reporting Act. The clause provides that provisional licence holders are required to comply with the requirements referred to in the clause only to the extent that the provisional licence conditions require compliance. Ratings provisions and certain Financial Reporting Act requirements are not included in this clause as introduced, meaning that insurers would have to be fully compliant with those requirements 18 months after the bill’s enactment. We consider that including the ratings and financial reporting requirements in this clause would make the transitional arrangements more flexible and avoid potential difficulties during this period.

Transitional matters

We recommend the insertion of subclause 229(1)(pa) to allow transitional provisions to be made for the coming into force of the statutory funds provisions in the bill (subpart 3 of Part 2). This would ensure that any unexpected consequences of the complexity of these provisions could be resolved. We recommend that this subclause be subject to a “sunset clause” limiting its existence to three years.

We also recommend amending the transitional provisions to allow insurers to request approval from the Reserve Bank for a portfolio transfer with another insurer in the 18-month period following the enactment of the bill, before they would have received full or provisional licences. We consider this amendment necessary to maximise the time available for an insurer to change its business structure to meet the standards expected under the legislation.

Appendix

Committee process

The Insurance (Prudential Supervision) Bill was referred to us on 8 December 2009. The closing date for submissions was 10 February 2010. We received and considered 57 submissions from interested groups and individuals. We heard 31 submissions.

We received advice from the Reserve Bank of New Zealand.

Committee membership

Craig Foss (Chairperson)

Amy Adams

David Bennett

John Boscawen

Brendon Burns

Hon David Cunliffe

Aaron Gilmore

Raymond Huo

Rahui Katene

Peseta Sam Lotu-Iiga

Stuart Nash

Dr Russel Norman

David Clendon replaced Dr Russel Norman from 19 April 2010

Key to symbols used

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Hon Simon William English

Insurance (Prudential Supervision) Bill

Government Bill

95—2

Contents

1 Title

2 Commencement

Part 1
Preliminary provisions

Purposes and principles

3 Purposes

4 Principles to be taken into account under this Act

Overview

5 Overview

Interpretation

6 Interpretation

7 Meaning of contract of insurance

8 Meaning of carrying on insurance business in New Zealand

8A Bank may declare that person is not carrying on insurance business in New Zealand in certain circumstances

9 Meaning of associated person and holding entity

10 Application of Act to friendly societies and credit unions

Bank's functions

11 Bank's functions under Act

12 Bank must have regard to directions about Government policy objectives

Act binds the Crown

13 Act binds the Crown

Part 2
Licensing and prudential regulation of insurers

Subpart 1—Licensing of insurers

Requirement to be licensed

14 Persons that carry on insurance business in New Zealand must be licensed

15 Offence for person who is not licensed insurer to hold itself out to be licensed insurer

Process for obtaining licence

16 Application for licence as insurer

17 Applicant must provide fit and proper policy, fit and proper certificate, and risk management programme

18 Entitlement to licence

19 Carrying on business in prudent manner

Conditions of licence

20 Conditions of licence

21 Bank may modify conditions of licence

22 Offence to fail to comply with conditions of licence

23 Licensed insurer must report likely failure to comply with solvency margin imposed under licence conditions

23 Licensed insurer must report likely failure to comply with solvency margin imposed under licence conditions

Notification of decision

24 Bank must notify applicant of decision and give notice on its Internet site

Bank must be notified before control is obtained and before corporate form is changed

25 Bank must be notified before controlling interest is acquired or obtained and before corporate form is changed

26 Bank must notify decision within 20 working days of receiving all relevant information

27 Meaning of controlling interest

25 Bank must be notified before control is obtained

26 Bank must be notified before corporate form is changed

27 Bank must consider whether it is still satisfied as to licensing matters

27A Offence to fail to notify or provide information

Cancellation of licence

28 Cancellation of licence

29 Assignment of liabilities to enable cancellation

30 Bank's approval of assignment

31 Effect of assignment

Fit and proper requirements

32 Licensed insurer must be subject to fit and proper policy for directors and relevant officers

33 Group fit and proper policy

34 Fit and proper matters

34 Fit and proper standards

35 Licensed insurer must provide fit and proper certificate for new directors or relevant officers or if Bank requires certificate

36 Bank may exempt overseas insurers from compliance with section 35(1)

37 Power to remove directors and relevant officers

38 How power to remove is exercised

39 Former director or relevant officer must not accept reappointment in breach of direction

40 Appeals from Bank's decision

41 Appeal to Court of Appeal on question of law

Transfers and amalgamations

42 Transfers and amalgamations must be approved

43 Request for approval

44 Actuarial or other report on transfer or amalgamation proposal

45 Costs of report

46 Bank must have regard to certain matters in considering request

47 Bank's decision on approval

48 Offence to fail to comply with conditions of approval

49 Requirement for approval is in addition to requirements under other enactments

50 Transfer or amalgamation not invalidated

51 Effect of assignment for purposes of approved transfer

Publication of policies

52 Publication of policies

Subpart 2—Prudential regulation of insurers

Solvency standards

53 Bank may issue solvency standards

54 Public notice of solvency standards

55 Consultation

56 Matters that may be contained in solvency standards

57 Offence to fail to comply with reporting and disclosure requirements

58 Incorporation by reference

59 Bank may amend or revoke solvency standard

60 Bank may exempt overseas insurers from compliance

Financial strength ratings

61 Licensed insurer must have current financial strength rating

61A Financial strength rating must refer to overseas policyholder preference

62 Bank may approve rating agencies

63 Licensed insurer must notify Bank of change in rating or credit watch warning

64 Disclosure of current rating to policyholder

65 Disclosure by insurers not required to be rated

66 Policyholder may cancel if disclosure is not made

67 Disclosure of rating on licensed insurer's Internet site

68 Other advertising of ratings

69 Licensed insurer must disclose downgrading in rating to policyholders under contracts of insurance with duration of more than 1 year

69 Licensed insurer must give public notice of downgrade or notice to policyholders

70 Licensed insurer must not disclose or advertise ratings from non-approved agencies

71 Offence to fail to comply with disclosure obligations

Disclosure of overseas policyholder preference

72 Overseas insurer must disclose overseas policyholder preference

Risk management

73 Licensed insurer must be subject to and comply with risk management programme

74 Group risk management programme

75 Offence to fail to comply with risk management requirements

Appointment of actuary and actuarial review

76 Requirement for licensed insurers to have appointed actuary

77 Review of actuarial information in, or used in the preparation of, financial statements

78 Appointed actuary's report

79 Provisions relating to auditor's report

80 Access to information

Supply of financial statements

81 Financial statements must be given to Bank

Subpart 3—Statutory funds of life insurers

General requirements

82 Requirement that life insurer have statutory funds

83 Overview of requirements regarding statutory funds

84 Meaning of life policy

85 Composite policies

86 Interpretation in this subpart

87 Duty of life insurer in relation to statutory funds

88 Notice to Bank when fund established

88A Life insurer must transfer assets on establishment

89 Assets of statutory fund

90 Identification of life policies referable to statutory fund

91 Payments to statutory fund

92 Capital payments to statutory funds

93 Expenditure and application of statutory fund

94 Prohibition of reinsurance between funds

95 Effect of non-compliance with section 93: general

96 Effect of non-compliance with section 93: certain classes of transactions

97 Investment performance guarantee: limit of certain liabilities

98 Investment of statutory funds

99 Recording of restricted investments

100 Transfer of assets between funds

101 Restriction on restructure or termination of statutory funds

102 Ascertainment of income and outgoings of statutory fund

Duties and liabilities of directors, etc

103 Duty of directors in relation to statutory funds

104 Bank may give notice

105 Liability of directors

106 Bank’s power to sue in name of life insurer

Restructure and termination of statutory funds

107 Restructure of statutory funds

108 Termination of statutory funds

Additional requirements for transfer of life policies between statutory funds by endorsement

109 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

111 Allocation of capital

112 Distribution of retained profits

113 Distribution of shareholders’ or members' capital

Application of statutory fund assets on liquidation or winding up

114 Application of statutory fund assets

Liability of directors for loss to statutory fund

115 Liability of directors for loss to statutory fund

Offence

116 Offence to fail to comply with subpart

Exemptions

117 Bank may exempt overseas insurers from compliance with subpart

Part 3
Prudential supervision of licensed insurers

Bank to undertake prudential supervision

118 Prudential supervision

Supply of information

119 Supply of information by licensed insurers for purposes of prudential supervision

120 Notice may require supply of information, data, or forecasts in relation to associated persons

121 Associated persons may be required to supply information to licensed insurers

122 Supply of information by other persons for purposes of prudential supervision

123 Requirement that information, data, or forecasts be audited or reviewed

124 Bank may require report relating to licensed insurers or associated persons

125 Disclosure of information to Bank by auditors and actuaries

126 Auditor or actuary to inform of intention to disclose

127 Protection of auditors and actuaries

Investigations

128 Investigations

129 Power to obtain information or documents

130 Power to enter and search place

131 Offences in relation to investigations

132 Effect of final decision that exercise of powers under sections 128 and 129 unlawful

Miscellaneous provisions

133 Confidentiality of information, data, documents, and forecasts

134 Limits on further disclosure of information, data, documents, or forecasts

135 Application of other enactments to information, data, documents, or forecasts published or disclosed under section 133

Part 4
Distress management

Subpart 1—Recovery plans

136 Bank may require licensed insurer to prepare recovery plan

137 Recovery plan must be provided to Bank for approval

138 Licensed insurer must comply with recovery plan

139 Amendments to recovery plan

140 Offence to fail to comply with recovery plan requirements

Subpart 2—Directions to licensed insurers and associated persons

141 Bank may give directions to licensed insurer

142 Scope of directions to licensed insurer

143 Bank may give directions to associated person

144 Scope of directions to associated person

145 Miscellaneous matters relating to directions

146 Offence to contravene directions

147 Power to remove, replace, or appoint directors, auditor, or actuary

148 Offence to disclose giving of direction or notice

Subpart 3—Liquidation or voluntary administration of licensed insurers

Bank may apply to put insurer into liquidation or voluntary administration, or apply for reduction of value of contracts of insurance

149 Bank may apply for liquidation of insurers

150 Bank may apply for High Court to reduce value of contracts of insurance

151 Bank may apply for voluntary administration of licensed insurers

Bank's approval for voluntary liquidation or appointment of administrator by company

152 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

154 Bank's participation in arrangements, amalgamations, and compromises under Companies Act 1993

155 Bank must be sent copy of applications under Parts 14 to 16 of Companies Act 1993

156 Bank must be sent copies of certain documents and may inspect certain accounts and records

157 Attendance of representative of Bank at certain meetings for insurer in voluntary administration, subject to deed of company arrangement, or in liquidation

158 Bank may require meeting of creditors or shareholders to appoint liquidation committee

Special insolvency provisions for insurers

159 High Court may reduce value of contracts of insurance

160 High Court may require actuarial report

161 Continuation of life policies if insurer in liquidation

162 Liquidator or deed administrator may apply to High Court for approval of scheme of transfer of insurance business

163 Right to attend and be heard

164 Approval of scheme

165 Effect of approval

166 Application by Bank for directions to liquidator, administrator, or deed administrator

167 Valuation of policies by liquidator or deed administrator

Subpart 4—Statutory management

Commencement of statutory management

168 Statutory management of licensed insurers and associated persons

169 Statutory management of overseas persons

170 Date and time of appointment

171 Grounds on which licensed insurer may be declared to be subject to statutory management

172 Grounds on which associated person may be declared to be subject to statutory management

173 Bank must give notice of recommendation

174 Application of this subpart to joint statutory managers, associated persons, and subsidiaries

175 Continuation of statutory management of companies restored to New Zealand register

Exercise of powers

176 Considerations affecting exercise of powers by statutory manager

177 Statutory manager to comply with directions of Bank

Application of Corporations (Investigation and Management) Act 1989

178 Application of Corporations (Investigation and Management) Act 1989

179 Act does not limit application of Corporations (Investigation and Management) Act 1989

Power to obtain documents and information

180 Powers to obtain documents and information

Sales and dispositions

181 Sale requires Bank's approval

182 Consents not required under other enactments

Body corporate may be formed to acquire branch of overseas person

183 Statutory manager may form body corporate to acquire business of branch of overseas person

184 Vesting of property subject to security

185 Proof of vesting

186 Provisions applying if liabilities included in sale

Obligations incurred by statutory manager

187 Obligations incurred by statutory manager

Value of contracts of insurance

188 Statutory manager may value policies

189 Value of contracts of insurance may be reduced by Order in Council

Auditor, actuary, and annual financial statements and records

190 Appointment of auditor and actuary

191 Prior auditor or actuary ceases to hold office

192 Removal of auditor or actuary

193 Annual financial statements

194 Annual report by statutory manager

Termination of statutory management

195 Termination of statutory management by Order in Council

196 Termination of statutory management on liquidation

197 Time of termination

Part 5
Miscellaneous provisions

Provisions relating to Lloyd's

198 Lloyd's underwriters must not carry on insurance business in New Zealand unless Lloyd's holds licence

199 Lloyd's may apply for licence on behalf of underwriting members

200 Lloyd's fit and proper policy and risk management programme

200A Bank must issue temporary licence to Lloyd's pending consideration of its application

201 Lloyd's underwriters may carry on insurance business in New Zealand if Lloyd's holds licence

202 Issue of licence to Lloyd's

203 Conditions of Lloyd's licence

203A Obligations on Lloyd's

204 Provisions that do not apply in respect of Lloyd's or Lloyd's underwriters

205 Bank may direct that Lloyd’s underwriters must not issue or renew contracts of insurance

206 Agent of Lloyd’s and address for service

207 Lloyd’s to give notice of enactments and bylaws

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

209 Access to information by overseas supervisor

210 Duties of person on receipt of notice under section 209

Offences

211 False declarations and representations

212 Liability of directors

213 Defence for offences against this Act

Prohibition against falsely holding out New Zealand connection

214 Prohibition against falsely holding out New Zealand connection

215 Certain New Zealand persons and overseas companies prohibited from using certain words in name

216 Prohibition does not apply in certain cases

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

Ban ordered by District Court

218 Power to ban certain persons from participating in insurance business

219 Notice of hearing

220 Appeals to High Court

221 Appeal to Court of Appeal on question of law

222 Register of banned persons

223 Search of register

224 Offence for banned person to participate in insurance business in breach of order

Notice and service

225 Notice and service of documents

Protection from liability and indemnity

226 Protection from liability

227 Indemnity

General provisions relating to declarations and exemptions

228 General provisions relating to declarations and exemptions

General provisions relating to fit and proper standards and solvency standards

228A Status of standards

228B Public notice of standards

228C Consultation

228D Bank may amend, revoke, or replace standard

Regulations

229 Regulations

229A Regulations may provide for exemptions

Repeals and consequential amendments

230 Amendments to Life Insurance Act 1908

231 Repeals

232 Amendments to other enactments

232A Amendment to Financial Service Providers (Registration and Dispute Resolution) Act 2008

Transitional provisions

232B Bank may approve certain transfers

233 Bank must issue provisional licence pending consideration of application

234 Bank may also issue provisional licence for insurer that is or will be in run-off

235 Duration of provisional licence

236 Provisional licence holder only required to comply with requirements to extent required by conditions

237 Conditions of licence

238 Public Trust must return deposits

239 Deposit may be withdrawn in accordance with Insurance Companies' Deposits Act 1953 or Life Insurance Act 1908

Schedule 1
General provisions relating to incorporation by reference

Schedule 2
General provisions relating to search powers

Schedule 3
Consequential amendments

The Parliament of New Zealand enacts as follows:

1 Title

  • This Act is the Insurance (Prudential Supervision) Act 2009.

2 Commencement

  • (1) Section 1, this section, Part 1, sections 34, 42 to 59 58, 62, 102, 199 to 208, 211 to 213, 225 to 229A, 232(1), and 233 232B 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.

    (2A) Section 232A comes into force on the day that is 3 years after the date on which this Act receives the Royal assent.

    (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.

Part 1
Preliminary provisions

Purposes and principles

3 Purposes

  • (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.

4 Principles to be taken into account under this Act

  • 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.

Overview

5 Overview

  • (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.

Interpretation

6 Interpretation

  • (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 Lloyd's or a Lloyd's underwriter, means any condition of the licence issued to Lloyd's under section 200A or 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

    fit and proper standard means a fit and proper standard issued under section 34

    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

    insurance intermediary means a person—

    • (a) who, for reward, arranges contracts of insurance in New Zealand or elsewhere; and

    • (b) who does so as the employee of or agent for 1 or more insurers or as the agent of the policyholder

    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 being a licensed insurer under section 201

    life insurer means a licensed insurer that issues, or is liable under, life policies

    life insurer—

    • (a) means a licensed insurer that issues, or is liable under, life policies; and

    • (b) includes a Lloyd's underwriter that issues, or is liable under, life policies and is treated as being a licensed insurer under section 201

    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 company means a body corporate that is incorporated outside New Zealand

    overseas insurer—

    • (a) means an insurer that is an overseas person; and

    • (b) includes a Lloyd's underwriter that is treated as an overseas being a licensed 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 in 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 the appointed actuary:

    • (b) in any other case,—

      • (i) chief executive officer:

      • (ii) chief financial officer:

      • (iii) an the 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.

7 Meaning of contract of insurance

  • (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.

    (1) For the purposes of this Act, unless the context otherwise requires, contract of insurance—

    • (a) means 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 1 or more uncertain events; and

    • (b) includes a contract of reinsurance.

    (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):

    • (fa) a call-out service that involves providing assistance in respect of a motor vehicle (within the meaning of section 2(1) of the Land Transport Act 1998) that cannot be operated (for example, because it has broken down, has run out of fuel, or has a flat tyre, or because the owner or operator is locked out), being a service that is not provided when the motor vehicle is involved in a motor vehicle accident, is stolen, or is damaged owing to theft or vandalism:

    • (g) any other transaction or matter of a class declared by regulations to be transactions or matters that are not by way of insurance.

8 Meaning of carrying on insurance business in New Zealand

  • (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

      • (iia) an association of persons formed outside New Zealand that is carrying on business in New Zealand within the meaning of section 332 of the Companies Act 1993 (applied with all necessary modifications as if the references in that section to an overseas company were references to an association of persons); 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 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; or

    • (e) an incorporated society or other association of persons that satisfies the criteria specified in subsection (3); or

    • (f) the subject of a declaration under section 8A.

    (3) The criteria that an incorporated society or other association of persons must satisfy for the purposes of subsection (2)(e) are that—

    • (a) the primary purpose or purposes of the society or association relate to a particular profession, trade, or occupation; and

    • (b) all of the members of the society or association consist of 1 or more of the following:

      • (i) persons that belong to, or are associated with, the particular profession, trade, or occupation:

      • (ii) bodies corporate or associations of persons that carry on the business of the particular profession, trade, or occupation:

      • (iii) persons that act on behalf of any person referred to in subparagraph (i) or (ii); and

    • (c) the society or association is not carried on for profit; and

    • (d) insurance cover is provided by the society or association only—

      • (i) to its members or relatives of its members; or

      • (ii) in respect of the activities of its members when carrying out, or conducting, the work of the profession, trade, or occupation; and

    • (e) the provision of insurance cover by the society or association is ancillary or incidental to the primary purpose or purposes of the society or association.

    (4) A person does not carry on insurance business in New Zealand for the purposes of this Act merely because the person—

    • (a) is a specified bailee who has liability in respect of goods belonging to another person and in the possession, or under the control, of the specified bailee for the purpose of the carriage, storage, or sale of those goods; or

    • (b) is an owner or operator of a specified place of accommodation who has liability in respect of goods belonging to another person that are—

      • (i) in the possession, or under the control, of a guest at the specified place of accommodation; or

      • (ii) deposited with the owner or operator of the specified place of accommodation for safe custody.

    (5) In subsection (4),—

    specified bailee means a carrier, carrier’s agent, forwarding agent, wharfinger, shipping agent, or the owner or operator of a warehouse

    specified place of accommodation means a hotel, motel, boarding house, or lodging house used for the provision of temporary or transient accommodation.

    (6) Subsection (1) is subject to subsections (2) to (4) and section 8A.

8A Bank may declare that person is not carrying on insurance business in New Zealand in certain circumstances

  • (1) The Bank may, by notice to a person, declare that the person is not carrying on insurance business in New Zealand for the purposes of this Act if the Bank is satisfied that—

    • (a) the person is or will be an insurer only by reason of the fact that the person—

      • (i) has entered or will enter into an isolated contract of insurance as an insurer; or

      • (ii) occasionally enters into contracts of insurance as an insurer; and

    • (b) entering into the contract or contracts referred to in paragraph (a) is incidental or ancillary to the business carried on by the person; and

    • (c) requiring the person to obtain a licence would, in the circumstances, be unduly onerous or burdensome.

    (2) Subsection (1) is subject to section 228 (which provides for general provisions relating to declarations and exemptions).

9 Meaning of associated person and holding entity

  • (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.

10 Application of Act to friendly societies and credit unions

  • 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.

Bank's functions

11 Bank's functions under Act

  • 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 and other persons 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.

12 Bank must have regard to directions about Government policy objectives

  • (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.

Act binds the Crown

13 Act binds the Crown

  • This Act binds the Crown.

Part 2
Licensing and prudential regulation of insurers

Subpart 1—Licensing of insurers

Requirement to be licensed

14 Persons that carry on insurance business in New Zealand must be licensed

  • (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.

15 Offence for person who is not licensed insurer to hold itself out to be licensed insurer

  • (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.

Process for obtaining licence

16 Application for licence as insurer

  • (1) Any body corporate that carries on insurance business in New Zealand, or proposes to carry on insurance business in New Zealand, 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.

17 Applicant must provide fit and proper policy, fit and proper certificate, and risk management programme

  • (1) 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 section 32; 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.

    (2) For the purposes of subsection (1)(b), the person that the insurer intends to appoint as the appointed actuary must be treated as being a relevant officer.

18 Entitlement to licence

  • (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

    • (ea) the applicant holds and has the ability to maintain a minimum amount of capital that is specified in an applicable solvency standard; and

    • (f) the applicant has complied with section 17(1)(a) and (b) and the fit and proper policy that is provided is satisfactory; and

    • (g) the applicant has complied with section 17(1)(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.

    (4) The law and regulatory requirements referred to in subsection (1)(i)(i), and the nature and extent of the prudential supervision referred to in subsection (1)(i)(ii), must be treated as being appropriate for the purposes of those provisions if the applicant's home jurisdiction is a prescribed jurisdiction for the purposes of this subsection.

    (5) If an applicant is not required under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 to be registered under that Act, the applicant is still required to comply with section 13(a) of that Act for the purposes of subsection (1)(j).

19 Carrying on business in prudent manner

  • (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.

Conditions of licence

20 Conditions of licence

  • (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 (including requiring the insurer to maintain a minimum amount of capital in accordance with the 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 (including requiring the insurer to maintain a minimum amount of capital in accordance with the 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 the 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).

    (4) A condition under subsection (2)(b) or (c) may—

    • (a) specify the amount of the solvency margin; or

    • (b) set the level of the solvency margin by means of a ratio, percentage of another amount, or in any other way.

21 Bank may modify conditions of licence

  • (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.

22 Offence to fail to comply with conditions of licence

  • 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.

23 Licensed insurer must report likely failure to comply with solvency margin imposed under licence conditions

  • (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.

23 Licensed insurer must report likely failure to comply with solvency margin imposed under licence conditions

  • (1) If a licensed insurer has reasonable grounds to believe that a failure to maintain a solvency margin is likely to occur at any time within the next 3 years, the insurer must report the likely failure to the Bank as soon as is reasonably practicable.

    (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 $500,000.

Notification of decision

24 Bank must notify applicant of decision and give notice on its Internet site

  • (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.

Bank must be notified before controlling interest is acquired or control is obtained and before corporate form is changed

25 Bank must be notified before controlling interest is acquired or obtained and before corporate form is changed

  • (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.

26 Bank must notify decision within 20 working days of receiving all relevant information

  • 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).

27 Meaning of controlling interest

  • 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).

25 Bank must be notified before control is obtained

  • (1) Subsection (2) applies if, as a result of a proposed transaction, a person (person A)—

    • (a) would become a holding entity of a licensed insurer; or

    • (b) would obtain control of a licensed insurer.

    (2) Person A must, before the proposed transaction takes effect, notify the Bank of the proposed transaction and include in its notification an explanation as to how this subsection applies to the person.

    (3) Subsection (2)—

    • (a) applies regardless of whether person A is a party to the proposed transaction; but

    • (b) does not apply to person A if—

      • (i) person A does not know of the proposed transaction before it takes effect; or

      • (ii) a specified person notifies the Bank of the proposed transaction under subsection (2).

    (4) In this section and sections 27 and 28,—

    • (a) proposed transaction means a transaction or an arrangement that is proposed to take effect after the licence is issued to the licensed insurer referred to in subsection (1):

    • (b) person A has control of an insurer if person A—

      • (i) has the power, directly or indirectly, to exercise, or control the exercise of, 50% or more of the voting rights in the insurer; or

      • (ii) has, together with 1 or more specified persons, the power, directly or indirectly, to exercise, or control the exercise of, 50% or more of the voting rights in the insurer:

    • (c) specified person, in relation to person A, means—

      • (i) a person who is acting or will act jointly or in concert with person A in respect of exercising, or controlling the exercise of, the voting rights in the licensed insurer referred to in subsection (1); or

      • (ii) a person who acts, or is accustomed to act, in accordance with the wishes of person A.

26 Bank must be notified before corporate form is changed

  • 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.

27 Bank must consider whether it is still satisfied as to licensing matters

  • (1) The Bank must, after being notified under section 25 or 26, consider whether, if the proposed transaction takes effect 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).

    (2) Each of the following persons must, within the time and in the manner specified by the Bank, provide to the Bank the information that is required by the Bank to assist it in acting under subsection (1):

    • (a) in the case of section 25, the person that notified the Bank and the licensed insurer:

    • (b) in the case of section 26, the licensed insurer.

    (3) The Bank must, within 20 working days after receiving under subsection (2) all of the information that is reasonably required by the Bank to assist it in acting under subsection (1), give written notice of its decision under that subsection together with a statement of the Bank's reasons to,—

    • (a) in the case of section 25, the person that notified the Bank and the licensed insurer:

    • (b) in the case of section 26, the licensed insurer.

27A Offence to fail to notify or provide information

  • A licensed insurer or other person that fails to comply with section 25, 26, or 27(2) commits an offence and is liable, on summary conviction, to a fine not exceeding $500,000.

Cancellation of licence

28 Cancellation of licence

  • (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) 25, 26, or 27(2) in respect of the licensed insurer (whether the failure is by a person referred to in section 25(1) 25(2) 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:

      • (v) the Bank has given a notice under section 27(3) that, if a proposed transaction takes effect 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 proposed transaction takes effect 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.

29 Assignment of liabilities to enable cancellation

  • (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.

30 Bank's approval of assignment

  • (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.

31 Effect of assignment

  • 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.

Fit and proper requirements

32 Licensed insurer must be subject to fit and proper policy for directors and relevant officers

  • (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.

    (3) The qualifications, requirements, and other criteria for a particular position that are specified in the fit and proper policy must, in the manner specified in an applicable fit and proper standard, take into account the fit and proper matters specified in the fit and proper standard.

    (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

    • (a) comply with the prescribed requirements; 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 section 35 and by the Bank for its powers and functions under this Act in connection with the policy.

    (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.

33 Group fit and proper policy

  • (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).

34 Fit and proper matters

  • (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.

34 Fit and proper standards

  • (1) The Bank may, by a notice signed by the Governor, issue fit and proper standards for the purposes of section 32(3) that—

    • (a) specify matters that are relevant to the consideration of whether a person is a fit and proper person to be appointed to, and continue to hold, a position as a director or relevant officer; and

    • (b) specify the manner in which those matters must be taken into account in respect of a fit and proper policy.

    (2) A fit and proper standard may be expressed to apply in relation to—

    • (a) all licensed insurers or applicants; or

    • (b) a specified class or classes of licensed insurers or applicants; or

    • (c) 1 or more specified licensed insurers or applicants.

    (3) A fit and proper standard may—

    • (a) have general or specific application:

    • (b) differ according to differences in time or circumstance.

    (4) This section is subject to sections 228A to 228D (which provide for general provisions relating to standards).

35 Licensed insurer must provide fit and proper certificate for new directors or relevant officers or if Bank requires certificate

  • (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.

36 Bank may exempt overseas insurers from compliance with section 35(1)

  • (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.

    (2A) The matters in subsection (2) must be treated as being satisfied in respect of an overseas insurer that is incorporated in a jurisdiction that is prescribed for the purposes of this subsection.

    (3) This section is subject to section 228 (which provides for general provisions relating to exemptions).

37 Power to remove directors and relevant officers

  • (1) This section applies if the Bank, after having regard to the fit and proper matters specified in section 34 an applicable fit and proper standard, 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.

38 How power to remove is exercised

  • (1) The Bank must not exercise a power referred to in 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 each 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.

39 Former director or relevant officer must not accept reappointment in breach of direction

  • (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).

40 Appeals from Bank's decision

  • (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.

41 Appeal to Court of Appeal on question of law

  • (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.

Transfers and amalgamations

42 Transfers and amalgamations must be approved

  • (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, or section 203A(5).

43 Request for approval

  • (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.

44 Actuarial or other report on transfer or amalgamation proposal

  • (1) The Bank may arrange for an independent actuary or any other suitably qualified person 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 or other person referred to in subsection (1) the information that is required by the actuary or person to assist him or her in preparing the report.

45 Costs of actuary's report

  • (1) A licensed insurer that makes a request under section 43 is liable to pay to the Bank the reasonable costs incurred by the Bank in obtaining the actuary's report report or reports 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.

46 Bank must have regard to certain matters in considering request

  • 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.

47 Bank's decision on approval

  • (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.

    (1A) The Bank must give the notice under subsection (1) within 20 working days after receiving both of the following:

    • (a) all of the information under section 43(3) that is reasonably required by the Bank to assist it in determining whether to give its approval:

    • (b) all reports that the Bank has arranged to receive under section 44 in respect of the proposed transfer or amalgamation.

    (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.

48 Offence to fail to comply with conditions of approval

  • A licensed insurer commits an offence if it fails to comply with a condition of the approval imposed under section 47 and is liable, on summary conviction, to a fine not exceeding $500,000.

49 Requirement for approval is in addition to requirements under other enactments

  • 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).

50 Transfer or amalgamation not invalidated

  • Nothing in sections 42 to 49 invalidates any transfer or amalgamation made without the written approval of the Bank.

51 Effect of assignment for purposes of approved transfer

  • (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).

Publication of policies

52 Publication of policies

  • 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.

Subpart 2—Prudential regulation of insurers

Solvency standards

53 Bank may issue solvency standards

  • (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 applicants; or

    • (b) a specified class or classes of licensed insurers or applicants; or

    • (c) 1 or more specified licensed insurers or applicants.

    (3) A solvency standard may—

    • (a) have general or specific application:

    • (b) differ according to differences in time or circumstance.

    (3A) The Bank must, before issuing a solvency standard, have regard to relevant overseas standards for the purpose of ensuring that the solvency standard to be issued by the Bank (the proposed standard) does not apply, in respect of a particular insurer, in an unreasonable manner (as compared to other insurers) as a result of the insurer being incorporated in New Zealand or some other jurisdiction.

    (3B) In subsection (3A), relevant overseas standards means standards relating to solvency or capital that—

    • (a) relate to matters that are the same as, or similar to, those that are covered by the proposed solvency standard; and

    • (b) apply to insurers in the home jurisdictions of the overseas insurers to which the proposed solvency standard will apply.

    (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.

    (4) This section is subject to sections 228A to 228D (which provide for general provisions relating to standards).

54 Public notice of solvency standards

  • (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.

55 Consultation

  • (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.

56 Matters that may be contained in solvency standards

  • A solvency standard may prescribe 1 or more of the following matters:

    • (ab) for the purposes of sections 18(1)(ea) and 20(2)(b) and (c),—

      • (i) the minimum amount of capital that an insurer must hold and maintain:

      • (ii) the methods for determining or calculating the amount of capital that an insurer must hold and maintain (whether by reference to a specified formula, framework, or amount, a combination of specified formulae, frameworks, or amounts, or otherwise):

    • (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 and other reports relating to the solvency of the 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 (ab) to (c),—

      • (i) the methods for estimating or valuing the assets or liabilities (or both) of a licensed an insurer:

      • (ii) the assets of a licensed an insurer that must be disregarded (in whole or in part) for the purposes of estimating or valuing the assets of a licensed an insurer:

    • (e) for the purposes of any of paragraphs (ab) to (c), any other matters relating to the assessment, or disclosure, of—

      • (i) whether, and the extent to which, the value of a licensed an insurer's assets exceeds the value of its liabilities (including contingent liabilities); or

      • (ii) whether a licensed an 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 or solvency of a licensed an insurer:

    • (ea) requirements relating to the disclosure of information relating to the financial condition or solvency of a licensed insurer to 1 or more of the following (including prescribing to whom and when disclosure must be made and the manner of disclosure):

      • (i) the Bank:

      • (ii) the insurer's policyholders or any class of those policyholders:

      • (iii) the public or any class of the public:

    • (f) matters relating to the manner in which a review of actuarial information under section 77 is to be carried out (including specifying information as being actuarial information for the purposes of that section).

57 Offence to fail to comply with financial condition report reporting and disclosure requirements

  • A licensed insurer commits an offence if it fails to comply with any of the requirements of a solvency standard under section 56(c) or (ea) that apply to the insurer and is liable, on summary conviction, to a fine not exceeding $500,000.

58 Incorporation by reference

  • (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.

59 Bank may amend or revoke 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.

60 Bank may exempt overseas insurers from compliance

  • (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).

Financial strength ratings

61 Licensed insurer must have current financial strength rating

  • (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

    • (a) a licensed insurer that is included in a class of insurers that is the subject of an exemption under section 229A(1)(a)(ii); or

    • (b) a licensed insurer if the only kind of insurance business carried on by the insurer in New Zealand 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.

61A Financial strength rating must refer to overseas policyholder preference

  • (1) If an overseas policyholder preference may apply in respect of a licensed insurer that is an overseas insurer, the financial strength rating of the insurer must, in the prescribed circumstances and in the prescribed manner, contain, or be accompanied by, a reference to the overseas policyholder preference when the financial strength rating is disclosed under any of sections 64 and 67 to 69.

    (2) If subsection (1) is not complied with, the licensed insurer must be treated as having failed to comply with section 64, 67, 68, or 69 (as the case may be).

62 Bank may approve rating agencies

  • (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.

63 Licensed insurer must notify Bank of change in rating or credit watch warning

  • (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.

64 Disclosure of current rating to policyholder

  • (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.

    (1A) If an insurance intermediary, in arranging a contract of insurance or the renewal of a contract of insurance, discloses to the policyholder in writing and before the contract is entered into or renewed the matters referred to in subsection (1) in relation to the proposed insurer, the insurer must be treated as having complied with that subsection.

    (2) If it is not reasonably practicable for a licensed insurer or insurance intermediary, as the case may be, 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 must be treated as having 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.

    (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.

65 Disclosure by insurers not required to be rated

  • (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.

    (1A) If an insurance intermediary, in arranging a contract of insurance or the renewal of a contract of insurance, discloses to the policyholder in writing and before the contract is entered into or renewed the matters referred to in subsection (1) in relation to the proposed insurer, the insurer must be treated as having complied with that subsection.

    (2) If it is not reasonably practicable for a licensed insurer or insurance intermediary, as the case may be, 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 must be treated as having 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.

    (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.

66 Policyholder may cancel if disclosure is not made

  • (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.

67 Disclosure of rating on licensed insurer's Internet site

  • (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.

68 Other advertising of ratings

  • (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 (with a view to obtaining business from New Zealand policyholders) 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).

69 Licensed insurer must disclose downgrading in rating to policyholders under contracts of insurance with duration of more than 1 year

  • 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.

69 Licensed insurer must give public notice of downgrade or notice to policyholders

  • (1) If, for the purposes of this Act, a licensed insurer is given a financial strength rating by an approved rating agency that is lower than the immediately preceding financial strength rating given to the insurer, the insurer must either,—

    • (a) within 10 working days after the lower rating is given, give public notice of the fact that the rating has been downgraded; or

    • (b) within 60 working days after the lower rating is given, give written notice of the fact that the rating has been downgraded to every New Zealand policyholder under a contract of insurance with the insurer.

    (2) A notice given by a licensed insurer under subsection (1) may include any additional matter that the insurer considers is relevant to a proper understanding of the reasons for the downgrading of the rating.

    (3) In this section, public notice means 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 an Internet site maintained by, or on behalf of, the licensed insurer.

70 Licensed insurer must not disclose or advertise ratings from non-approved agencies

  • (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.

71 Offence to fail to comply with disclosure obligations

  • A licensed insurer commits an offence if it fails to comply with any of sections 63 and 67 to 70 and is liable, on summary conviction, to a fine not exceeding $500,000.

Disclosure of overseas policyholder preference

72 Overseas insurer must disclose overseas policyholder preference

  • (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.

Risk management

73 Licensed insurer must be subject to and comply with risk management programme

  • (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.

    (5) However, if it is not reasonably practicable for a licensed insurer to obtain the Bank's approval before its risk management programme is amended in a material way (for example, because the amendment needs to be made urgently),—

    • (a) the insurer may amend the risk management programme before obtaining the approval; but

    • (b) the amendment ceases to have effect if—

      • (i) the insurer fails to notify the Bank of the amendment within 5 working days after the amendment is made; or

      • (ii) the Bank does not give its approval to the amendment within 5 working days after being notified of the amendment.

74 Group risk management programme

  • (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).

75 Offence to fail to comply with risk management requirements

  • 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.

Appointment of actuary and actuarial review

76 Requirement for licensed insurers to have appointed actuary

  • (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 the appointed actuary under subsection (1) or within any longer period allowed by the Bank, 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.

77 Review of actuarial information in, or used in the preparation of, financial statements

  • (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 the 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; and

    • (c) information specified in an applicable solvency standard as being actuarial information for the purposes of this section.

    (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.

78 Appointed actuary's report

  • 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

    • (f) whether, in the actuary's opinion and from an actuarial perspective,—

      • (i) the actuarial information contained in the financial statements and any group financial statements has been appropriately included in those statements (and if not, the respects in which it has been inappropriately included); and

      • (ii) the actuarial information used in the preparation of the financial statements and any group financial statements has been used appropriately (and if not, the respects in which it has been used inappropriately); 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).

79 Provisions relating to auditor's report and audit conducted by auditor

  • 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.

80 Access to information

  • (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) anthe appointed actuary; or

    • (b) an actuary that is appointed by or under any of the provisions of this Act to investigate, or otherwise prepare a report in respect of, the insurerperform or exercise any function, duty, or power in respect of the insurer.

Supply of financial statements

81 Financial statements must be given to Bank

  • (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.

    (2A) In subsection (2), subsidiaries has the same meaning as in section 2(1) of the Financial Reporting Act 1993.

    (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).

    (3A) This section is subject to any exemption under section 229A(1)(a)(iii) in respect of any provision of this section.

    (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.

Subpart 3—Statutory funds of life insurers

General requirements

82 Requirement that life insurer have statutory funds

  • (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.

    (3) This subpart does not apply to a life insurer that is included in a class of insurers that is the subject of an exemption under section 229A(1)(a)(iv).

83 Overview of requirements regarding statutory funds

  • (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.

84 Meaning of life policy

  • (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 (the insured person); or

      • (ii) injury to, or a disability of, the policyholder insured person as a result of accident or sickness; or

      • (iii) the policyholder insured person being found to have a stated condition or disease:

    • (da) a contract of insurance that constitutes an investment account contract:

    • (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 stated condition or disease.

    (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.

    (5) In subsection (1)(da), investment account contract means a contract that—

    • (a) 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; and

    • (b) provides for the benefits to be calculated by reference to units the value of which are guaranteed by the contract not to be reduced; and

    • (c) provides for the account to be increased (for example, by the amounts of premiums paid or interest payable).

    (6) However, a contract is not an investment account contract if it provides for the account to be reduced otherwise than by the amounts of withdrawals by the person responsible for the payment of premiums or by the amounts of charges payable under the contract.

85 Composite 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:

    • (a) if, in relation to an insurance product line, the proportion of the premiums that relate to life insurance is less than 25%, each contract of insurance in the insurance product line 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:

    • (b) if, in relation to an insurance product line, the proportion of the premiums that relate to non-life insurance is less than 25%, each contract of insurance in the insurance product line must be treated as if it were a life policy:

    • (c) in any other case, in relation to each contract of insurance in any other insurance product line,—

      • (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 premiums that relate to either life insurance or non-life insurance must be determined by the appointed actuary.

    (3A) For the purposes of subsection (3), the appointed actuary must determine the proportions on the basis of premiums allocated, or expected to be allocated, as at the time that the contracts of insurance are entered into.

    (4) This section is subject to section 84(3) and (4).

    (5) In this section,—

    insurance product line means all contracts of insurance entered into by an insurer that have the same, or substantially the same, terms and conditions

    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.

86 Interpretation in this subpart

  • (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.

87 Duty of life insurer in relation to statutory funds

  • (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 or under this subpart to do.

88 Notice to Bank when fund established

  • (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.

88A Life insurer must transfer assets on establishment

  • A life insurer must transfer to a statutory fund on its establishment assets of a value that is ascertained in the prescribed manner.

89 Assets of statutory fund

  • (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.

90 Identification of life policies referable to statutory fund

  • (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 12 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.

91 Payments to statutory fund

  • The following amounts must be credited by a life insurer to a statutory fund:

    • (ab) amounts that must, in accordance with the regulations, be credited to the statutory fund on its establishment:

    • (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.

92 Capital payments to statutory funds

  • (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.

93 Expenditure and application of 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 for the purposes of the business of the statutory fund.

    (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.

94 Prohibition of reinsurance between funds

  • (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.

95 Effect of non-compliance with section 93: general

  • (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).

96 Effect of non-compliance with section 93: certain classes of transactions

  • (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.

97 Investment performance guarantee: limit of certain liabilities

  • (1) This section applies to a statutory fund if—

    • (a) the business of the fund consists of includes 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.

    (2) A life insurer must at all times comply with the restrictions on, and other requirements in respect of, the investment performance guarantee that are prescribed for the purposes of this section (if any).

    (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.

98 Investment of statutory funds

  • (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, or whose securities are otherwise quoted on,—

    • (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.

99 Recording of restricted investments

  • (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.

100 Transfer of assets between funds

  • (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.

101 Restriction on restructure or termination of statutory funds

  • (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.

102 Ascertainment of income and outgoings of statutory fund

  • (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.

Duties and liabilities of directors, etc

103 Duty of directors in relation to statutory funds

  • (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 by or under any other enactment are subject to this section to the effect that the director will not be in breach of those duties as a result of complying with the duties imposed under this section).

104 Bank may give notice

  • (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).

105 Liability of directors

  • (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.

106 Bank’s power to sue in name of life insurer

  • (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.

Restructure and termination of statutory funds

107 Restructure of statutory funds

  • (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.

108 Termination of statutory funds

  • (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.

Additional requirements for transfer of life policies between statutory funds by endorsement

109 Additional requirements for transfer of life policies between statutory funds by endorsement

  • (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.

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

  • 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.

111 Allocation of capital

  • (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.

112 Distribution of retained profits

  • The distribution of retained profits of a statutory fund must be made in accordance with the prescribed requirements.

113 Distribution of shareholders’ or members' capital

  • A distribution of shareholders’ or members' capital in relation to a statutory fund may be made only in accordance with the prescribed requirements.

Application of statutory fund assets on liquidation or winding up

114 Application of statutory fund assets

  • (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, debts, 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 primary fund 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, debts, 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 manner that 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.

    (4A) If, for the purposes of subsection (4)(a), the assets are insufficient to discharge all of the policy liabilities of the life insurer referable to the primary fund, the assets are to be applied in discharge of those policy liabilities in the manner that the High Court directs.

    (4B) If, for the purposes of subsection (4)(b), the assets are insufficient to discharge all of the other liabilities that are referable to the business of the primary fund, the assets are to be applied in discharge of those liabilities in the manner that the High Court directs.

    (4C) Directions given for the purpose of subsection (4)(c), (4A), or (4B) are to be the directions that the High Court considers equitable, having regard to,—

    • (a) in the case of subsection (4)(c),—

      • (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 subsection (4)(b); and

      • (iv) the interests of shareholders or members of the life insurer:

    • (b) in the case of subsection (4A), the interests of the policyholders of life policies referable to the primary fund:

    • (c) in the case of subsection (4B), the interests of creditors in respect of the other liabilities that are referable to the business of the primary fund.

    (5) The reference in subsection (4)(d)(iii) (4C)(a)(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.

Liability of directors for loss to statutory fund

115 Liability of directors for loss to statutory fund

  • (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.

Offence

116 Offence to fail to comply with subpart

  • (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.

Exemptions

117 Bank may exempt overseas insurers from compliance with subpart

  • (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.

    (2A) The matters in subsection (2) must be treated as being satisfied in respect of an overseas insurer that is incorporated in a jurisdiction that is prescribed for the purposes of this subsection.

    (3) This section is subject to section 228 (which provides for general provisions relating to exemptions).

Part 3
Prudential supervision of licensed insurers

Bank to undertake prudential supervision

118 Prudential supervision

  • The Bank must in accordance with this Part undertake prudential supervision of licensed insurers.

Supply of information

119 Supply of information by licensed insurers for purposes of prudential supervision

  • (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.

120 Notice may require supply of information, data, or forecasts in relation to associated persons

  • 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.

121 Associated persons may be required to supply information to licensed insurers

  • (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.

122 Supply of information by other persons for purposes of prudential supervision

  • (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.

123 Requirement that information, data, or forecasts be audited or reviewed

  • (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.

124 Bank may require report relating to licensed insurers or associated persons

  • (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.

    (1A) The notice under subsection (1) must contain a statement of the reasons why the Bank wants the report or series of reports to be supplied.

    (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.

125 Disclosure of information to Bank by auditors and actuaries

  • Every person who holds, or at any time has held, 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

      • (i) is failing to maintain a solvency margin or is likely to fail to maintain a solvency margin at any time within the next 3 years; 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.

126 Auditor or actuary to inform of intention to disclose

  • 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.

127 Protection of auditors and actuaries

  • (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.

Investigations

128 Investigations

  • (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.

129 Power to obtain information or documents

  • (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.

130 Power to enter and search place

  • (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.

131 Offences in relation to investigations

  • (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.

132 Effect of final decision that exercise of powers under sections 128 and 129 unlawful

  • 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.

Miscellaneous provisions

133 Confidentiality of information, data, documents, and forecasts

  • (1) This section applies to—

    • (a) information, data, documents, 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, documents, 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, data, document, or forecast to which this section applies only if—

    • (a) the information or data is, data, document, or forecast is available to the public under any Act or is otherwise publicly available information; or

    • (b) the information or data or forecast is in a statistical or summary form; or

    • (c) the publication or disclosure of the information or data, data, document, or forecast 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, data, document, or forecast is to any authority or body in any other country that exercises performs 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, data, document, or forecast will only be used by that authority or body for the purpose of exercising performing those functions; or

    • (e) the publication or disclosure of the information or data, data, document, or forecast is to any person that the Bank is satisfied has a proper interest in receiving the information, data, document, or forecast; 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.

    • (f) the publication or disclosure of the information, data, document, or forecast is with the consent of the person to whom that material relates or of the person to whom that material is confidential.

    (3) The Bank must not publish or disclose information or data, data, a document, or a forecast under subsection (2)(d) or (e) unless the Bank is satisfied that appropriate provision exists to protect the confidentiality of that information or data material.

    (4) An officer or employee of the Bank or an investigator must not publish or disclose any information or data, data, document, or forecast 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).

134 Limits on further disclosure of information, data, documents, or forecasts

  • (1) A person to whom any information or data, data, document, or forecast is published or disclosed under section 133(2)(c), (e), or (f) must not publish, disclose, or use that information or data, data, document, or forecast 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 performance or exercise of functions or 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.

135 Application of other enactments to information, data, documents, or forecasts published or disclosed under section 133

  • 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, data, a document, or a forecast has been published or disclosed under section 133 to make that information or data, data, document, or forecast available to any other person.

Part 4
Distress management

Subpart 1—Recovery plans

136 Bank may require licensed insurer to prepare recovery plan

  • (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.

137 Recovery plan must be provided to Bank for approval

  • (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.

138 Licensed insurer must comply with recovery plan

  • The licensed insurer must, after the recovery plan has been approved by the Bank, take all practicable steps to comply with the plan.

139 Amendments to recovery 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.

140 Offence to fail to comply with recovery plan 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.

Subpart 2—Directions to licensed insurers and associated persons

141 Bank may give directions to licensed insurer

  • (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).

    (1A) The Bank must, before giving a direction under subsection (1) to a licensed insurer, consider whether, in the circumstances, it would be more appropriate to give a direction to the insurer to prepare a recovery plan under subpart 1.

    (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.

142 Scope of directions to licensed 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 However, 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.

143 Bank may give directions to associated person

  • 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.

144 Scope of directions to associated person

  • 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.

145 Miscellaneous matters relating to directions

  • (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.

146 Offence to contravene directions

  • (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.

147 Power to remove, replace, or appoint directors, auditor, or actuary

  • (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 the 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 the 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 the 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 the 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 concerned, 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.

148 Offence to disclose giving of direction or notice

  • (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, or on behalf of, the Bank or with the written consent of the Bank,—

      • (i) to the public or any class of 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.

Subpart 3—Liquidation or voluntary administration of licensed insurers

Bank may apply to put insurer into liquidation or voluntary administration, or apply for reduction of value of contracts of insurance

149 Bank may apply for liquidation of insurers

  • (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.

150 Bank may apply for High Court to reduce value of contracts of insurance

  • (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.

151 Bank may apply for voluntary administration of licensed insurers

  • 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.

Bank's approval for voluntary liquidation or appointment of administrator by company

152 Bank's approval for voluntary liquidation or appointment of administrator by 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.

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

  • (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 239R, 239AM, 239ACJ, 239ACL, 239ACX, 239ADB, 239ADD, 239ADO to 239ADQ, 239ADS to 239ADV, 239AER, 239AEU, 245A, 250, 271, 283(4), 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.

154 Bank's participation in arrangements, amalgamations, and compromises under Companies Act 1993

  • (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, 233, 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.

155 Bank must be sent copy of applications under Parts 14 to 16 of Companies Act 1993

  • (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.

156 Bank must be sent copies of certain documents and may inspect certain accounts and records

  • (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.

157 Attendance of representative of Bank at certain meetings for insurer in voluntary administration, subject to deed of company arrangement, or in liquidation

  • (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.

158 Bank may require meeting of creditors or shareholders to appoint liquidation committee

  • (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).

Special insolvency provisions for insurers

159 High Court may reduce value of contracts of insurance

  • (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.

160 High Court may require actuarial report

  • (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.

161 Continuation of life policies if insurer in liquidation

  • (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.

162 Liquidator or deed administrator may apply to High Court for approval of scheme of transfer of insurance business

  • (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—

    • (a) the contracts of insurance in respect of which liability is to be assumed by the transferee (including a description of each class of contract that is sufficient to identify it, and the amount of the liability in respect of each class); and

    • (b) the assets that are to be transferred to the transferee in consideration for the assumption of that liability; and

    • (c) the net value of those assets; and

    • (d) the terms of the agreement or deed under which the proposed transfer is to be carried out; and

    • (e) particulars of any other arrangements necessary to give effect to the scheme.

    (3) The following reports must be provided to the High Court in respect of an application under subsection (1):

    • (a) a report on the scheme prepared by the Bank that contains the matters required by the High Court and any other matters that the Bank thinks fit; and

    • (b) an independent actuary's report on the scheme obtained by the Bank that contains the matters required by the High Court and any other matters that the Bank thinks fit.

    (4) The licensed insurer is liable to pay to the Bank the costs incurred by the Bank in obtaining the actuary's report under subsection (3)(b) (and the amount payable is recoverable as a debt due to the Bank in any court of competent jurisdiction).

163 Right to attend and be heard

  • (1) If an application is made under section 162, the liquidator or deed administrator must, as soon as practicable after it is filed, serve notice of the application on each of the following:

    • (a) the Bank:

    • (b) the transferee:

    • (c) the person appointed by the High Court to represent the policyholders of the licensed insurer or any class of those policyholders:

    • (d) the person appointed by the High Court to represent the shareholders or members of the licensed insurer or any class of those shareholders or members:

    • (e) the person appointed by the High Court to represent the creditors of the licensed insurer or any class of those creditors.

    (2) The following persons are entitled to appear and be heard on the application:

    • (a) each person to whom notice of the application has been sent under subsection (1):

    • (b) with the leave of the High Court, any other person who appears to the court to have a sufficient interest in the application.

    (3) In respect of a proceeding or intended proceeding under section 162, the High Court may, on an application by the liquidator, the deed administrator, or the Bank, or on its own initiative, appoint persons for the purposes of subsection (1)(c) to (e).

164 Approval of scheme

  • (1) The High Court may—

    • (a) approve the scheme without modification; or

    • (b) approve the scheme subject to the modifications that it thinks fit (subject to the agreement of the liquidator or deed administrator, the Bank, and the transferee); or

    • (c) refuse to approve the scheme.

    (2) In deciding whether to approve a scheme (with or without modifications), the High Court must have regard to—

    • (a) the interests of the policyholders, shareholders or members, and creditors of the licensed insurer who are affected by the scheme; and

    • (b) the reports referred to in section 162(3); and

    • (c) any other matter the court considers relevant.

165 Effect of approval

  • When a scheme is approved—

    • (a) it becomes binding on all persons; and

    • (b) it has effect in spite of anything in the constitution of any licensed insurer affected by the scheme; and

    • (c) the liquidator or deed administrator must send a copy of the scheme to the Bank.

166 Application by Bank for directions to liquidator, administrator, or deed administrator

  • (1) The Bank may apply to the High Court for the court to give directions to the liquidator, administrator, or deed administrator of a licensed insurer relating to the performance or exercise of any of the liquidator's, administrator's, or deed administrator's functions or powers.

    (2) On an application under subsection (1), the High Court may give directions concerning the performance or exercise of any of the liquidator's, administrator's, or deed administrator's functions or powers, and every person is bound by those directions.

    (3) The liquidator, administrator, or deed administrator is entitled to appear and be heard on the application.

167 Valuation of policies by liquidator or deed administrator

  • (1) The liquidator of a licensed insurer must determine the amount of the liability of the insurer to each policyholder under each contract of insurance entered into in New Zealand by the insurer in the manner and on the basis that the liquidator decides.

    (2) A deed administrator of a licensed insurer may determine the amount of the liability of the insurer to each policyholder under each contract of insurance entered into in New Zealand by the insurer in the manner and on the basis that the deed administrator decides.

    (3) The liquidator or deed administrator (if the deed administrator acts under subsection (2)) must give to each policyholder notice in writing of the amount of the liability under the policyholder's contract of insurance as determined under subsection (1) or (2).

    (4) The amount of the liability of the licensed insurer, as determined by the liquidator or deed administrator under subsection (1) or (2), is binding upon each policyholder to whom notice is given under subsection (3), unless, within 2 months after the date the notice was given, that person appeals to the High Court against the liquidator's or deed administrator's determination.

    (5) On an appeal to the High Court against the liquidator's or deed administrator's determination, the High Court may confirm, reverse, or modify the determination appealed against and may make any other order that it thinks fit.

Subpart 4—Statutory management

Commencement of statutory management

168 Statutory management of licensed insurers and associated persons

  • (1) The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank,—

    • (a) declare that a licensed insurer is subject to statutory management; and

    • (b) declare that an associated person of a licensed insurer is subject to statutory management; and

    • (c) appoint 1 or more persons as statutory manager or statutory managers of the licensed insurer or associated person for a specified period.

    (2) If an Order in Council is made under subsection (1),—

    • (a) every subsidiary of a licensed insurer declared to be subject to statutory management, except any subsidiary declared to be a subsidiary to which the order does not apply, is subject to statutory management; and

    • (b) the appointment of a statutory manager for the specified period in respect of the licensed insurer also applies to those subsidiaries.

    (3) If a licensed insurer acquires a subsidiary after it has been declared to be subject to statutory management under subsection (1), the subsidiary is not subject to statutory management unless a further Order in Council is made declaring the subsidiary to be subject to statutory management.

169 Statutory management of overseas persons

  • If a licensed insurer or an associated person of a licensed insurer that is declared to be subject to statutory management, or a subsidiary of a licensed insurer that becomes subject to statutory management under section 168(2) or (3), is an overseas person, the provisions of this subpart apply to the property, rights, assets, and liabilities relating to its New Zealand business.

170 Date and time of appointment

  • (1) Every Order in Council made under section 168(1) must specify the date on which, and the time at which, the Order in Council comes into force.

    (2) The date and time as specified must not be earlier than the date on which, and the time at which, the Order in Council is made.

    (3) If a question arises as to whether, on the date on which a statutory manager was appointed, an act was done or a transaction was entered into or effected before or after the appointment, the act or transaction must, in the absence of proof to the contrary, be treated as having been done, entered into, or effected, as the case may be, after the appointment of the statutory manager.

171 Grounds on which licensed insurer may be declared to be subject to statutory management

  • (1) The Bank may make a recommendation under section 168 in respect of a licensed insurer only if it is satisfied on reasonable grounds that—

    • (a) 1 or more of the circumstances specified in section 141(1)(a) to (f) apply and the failure of the insurer may cause significant damage to the financial system or the economy of New Zealand (or both); or

    • (b) 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 for the purpose of—

      • (i) limiting or preventing the risk of further deterioration of the financial affairs of the insurer; or

      • (ii) limiting or preventing the carrying out, or the effects, of any fraudulent act or activity; or

      • (iii) enabling the affairs of the insurer to be dealt with in a more orderly or expeditious way.

    (2) However, the Bank must not make a recommendation under section 168 in respect of a licensed insurer unless it is satisfied on reasonable grounds that the public interest, the financial system or economy of New Zealand, or any policyholders of the insurer cannot be adequately protected under the provisions of this Act other than this subpart or under the Companies Act 1993.

172 Grounds on which associated person may be declared to be subject to statutory management

  • (1) The Bank may make a recommendation under section 168 in respect of an associated person of a licensed insurer if it is satisfied on reasonable grounds that—

    • (a) 1 or more of the circumstances specified in section 143(a) to (c) apply; or

    • (b) the business and affairs of the licensed insurer are so closely connected with the associated person that a statutory manager would be unable to exercise effectively the powers conferred by this subpart in relation to the insurer unless the statutory manager is also appointed as statutory manager of the associated person; or

    • (c) 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 this Act or the regulations, and that it is desirable that the person be declared to be subject to statutory management for the purpose of—

      • (i) limiting or preventing the risk of further deterioration of the financial affairs of the person; or

      • (ii) limiting or preventing the carrying out, or the effects, of any fraudulent act or activity; or

      • (iii) enabling the affairs of the person to be dealt with in a more orderly or expeditious way.

    (2) However, the Bank must not make a recommendation under section 168 in respect of an associated person of a licensed insurer unless it is satisfied on reasonable grounds that the public interest, the financial system or economy of New Zealand, or any policyholders of the person or of the insurer cannot be adequately protected under the provisions of this Act other than this subpart or under the Companies Act 1993.

    (3) If an associated person of a licensed insurer is also a licensed insurer, the Bank may make a recommendation under section 168 in respect of the person on any of the grounds in subsection (1) or section 171.

    (4) Section 171 does not limit subsection (3).

173 Bank must give notice of recommendation

  • The Bank must, as soon as practicable after the making of an Order in Council under section 168 declaring a licensed insurer or an associated person of a licensed insurer to be subject to statutory management, give written notice to the insurer or associated person stating the grounds on which the Bank's recommendation was made.

174 Application of this subpart to joint statutory managers, associated persons, and subsidiaries

  • (1) If an Order in Council is made under section 168 appointing 2 or more persons as statutory managers of a licensed insurer, the order must state whether the powers conferred by this subpart must be exercised by those persons acting together or may be exercised individually.

    (2) For the purposes of this subpart, unless the context otherwise requires,—

    • (a) references to a statutory manager, if 2 or more persons are appointed as statutory managers, include references to those statutory managers:

    • (b) if an associated person of a licensed insurer is declared to be subject to statutory management, or a subsidiary of a licensed insurer becomes subject to statutory management under section 168(2) or (3),—

      • (i) references to a licensed insurer in this subpart must be read as including references to the associated person or subsidiary, as the case may be; and

      • (ii) references to a corporation in the provisions of the Corporations (Investigation and Management) Act 1989 (as applied by section 178) must be read as including references to the associated person or subsidiary, as the case may be.

175 Continuation of statutory management of companies restored to New Zealand register

  • (1) This section applies to a licensed insurer, an associated person of a licensed insurer, or a subsidiary of a licensed insurer that has been removed from the New Zealand register under section 317 of the Companies Act 1993 while subject to statutory management.

    (2) If a person to whom this section applies is restored to the New Zealand register under section 328 of the Companies Act 1993, the person continues to be subject to statutory management from the date the person is so restored.

Exercise of powers

176 Considerations affecting exercise of powers by statutory manager

  • (1) In exercising the powers conferred by this subpart, a statutory manager of a licensed insurer must have regard to—

    • (a) the purposes of this Act; and

    • (b) the principles set out in section 4 that are relevant to the exercise of those powers; and

    • (c) the advice of the Bank.

    (2) Every statutory manager must—

    • (a) consult with the Bank, to the extent required by the Bank, as to the exercise of those powers:

    • (b) provide the reports that the Bank may require as to the state of the affairs, business, and statutory management of the licensed insurer to persons specified by the Bank (including, but not limited to, the Bank) in the form and with the frequency that the Bank may require.

    (3) The powers conferred by this subpart on a statutory manager of a life insurer are subject to the requirements of subpart 3 of Part 2 (which relates to statutory funds).

177 Statutory manager to comply with directions of Bank

  • (1) Every statutory manager of a licensed insurer must comply with any directions given in writing by the Bank relating to the exercise of the powers of the statutory manager under this subpart.

    (2) This section is subject to section 58 of the Corporations (Investigation and Management) Act 1989 (as applied by section 178).

Application of Corporations (Investigation and Management) Act 1989

178 Application of Corporations (Investigation and Management) Act 1989

  • The following provisions of the Corporations (Investigation and Management) Act 1989 apply for the purposes of this subpart with all necessary modifications as if a person declared to be subject to statutory management under this subpart were a corporation declared to be subject to statutory management under that Act:

    • (a) section 42 (which relates to a moratorium):

    • (b) section 43 (which contains a prohibition against the removal of assets), except that a person who commits an offence under section 43(2) is liable on summary conviction,—

      • (i) 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):

      • (ii) in the case of a body corporate, to a fine not exceeding $500,000:

    • (c) section 44 (which relates to the statutory manager suspending payment of money owing):

    • (d) section 45 (which relates to management vesting in the statutory manager):

    • (e) section 46 (which relates to the powers of the statutory manager):

    • (f) section 47 (which empowers the statutory manager to carry on the business of the person in statutory management):

    • (g) section 48 (which empowers the statutory manager to pay creditors and to compromise claims):

    • (h) section 49 (which relates to the termination of contracts of agency or service):

    • (i) sections 50(1) and (2), 51, 53, and 72 (which relate to the power of the statutory manager to sell the business undertaking of the person in statutory management):

    • (j) section 52 (which relates to the liquidation of the person in statutory management):

    • (k) section 54 (which relates to a power to trace property improperly disposed of):

    • (l) section 55 (which relates to the application of certain provisions of the Companies Act 1993):

    • (m) section 57 (which relates to termination of the appointment of the statutory manager), except that section 57(3) and (4) also apply where the statutory manager's period of appointment has expired:

    • (n) section 58 (which allows a statutory manager to apply to the High Court for directions):

    • (o) section 59 (which allows the High Court to confer additional powers on the statutory manager):

    • (p) section 60 (which relates to advisory committees):

    • (q) section 61 (which provides for a prior winding up, liquidation, or receivership to cease):

    • (r) section 64 (which relates to certain persons not being entitled to be consulted about the exercise of powers):

    • (s) section 65 (which relates to the expenses of statutory management):

    • (t) section 66 (which relates to advances to statutory managers and members of advisory committees):

    • (u) sections 67 and 68 (which relate to a duty to deliver books and property to the statutory manager and an offence to destroy, alter, or conceal records):

    • (v) section 69 (which relates to a duty to report offences):

    • (w) sections 71 and 71A (which relates to the application of other Acts).

179 Act does not limit application of Corporations (Investigation and Management) Act 1989

  • (1) Nothing in this Act limits the Corporations (Investigation and Management) Act 1989.

    (2) In particular, a licensed insurer (or an associated person of a licensed insurer) may be declared to be subject to statutory management, or subject to the exercise of any other powers, under that Act.

Power to obtain documents and information

180 Powers to obtain documents and information

  • A statutory manager has, and may exercise, all of the powers conferred on a liquidator of a company by sections 261 to 267 of the Companies Act 1993 in the same manner as if the statutory manager were the liquidator of a company in liquidation under that Act (and, for that purpose, section 373(3) of that Act applies with all necessary modifications).

Sales and dispositions

181 Sale requires Bank's approval

  • The statutory manager may not sell or otherwise dispose of the following unless the statutory manager has consulted with the Bank and the Bank, with the consent of the Minister, has given approval in writing to the sale or other disposition and the terms and conditions of it:

    • (a) the whole or any substantial part of the business undertaking of a licensed insurer under section 50(1) of the Corporations (Investigation and Management) Act 1989 (as applied by section 178):

    • (b) any of the shares of a body corporate formed and registered under section 50(2)(a) of that Act (as applied by section 178):

    • (c) the whole or any substantial part of the business undertaking of a body corporate formed and registered under section 50(2)(a) of that Act (as applied by section 178).

182 Consents not required under other enactments

  • The provisions of any enactment or agreement requiring any consent, licence, permission, clearance, or other authority do not apply in respect of the following (being a sale or disposition to which the Bank has, with the consent of the Minister, given its approval under section 181):

    • (a) the sale or other disposition of the whole or any part of the business undertaking of a licensed insurer under section 50(1) of the Corporations (Investigation and Management) Act 1989 (as applied by section 178):

    • (b) the sale or other disposition under section 50(2)(e) of that Act (as applied by section 178) of—

      • (i) any of the shares of a body corporate formed and registered under section 50(2)(a) of that Act; or

      • (ii) the whole or any part of the business undertaking of that body corporate.

Body corporate may be formed to acquire branch of overseas person

183 Statutory manager may form body corporate to acquire business of branch of overseas person

  • (1) If a licensed insurer that is an overseas person is declared to be subject to statutory management, the statutory manager may—

    • (a) form and register a body corporate under the Companies Act 1993 or any other Act:

    • (b) subscribe for or acquire, as trustee for the overseas person, all or any of the shares of the body corporate:

    • (c) allot or issue all or any of the shares in the body corporate as fully or partly paid, as the case may be, up to the value of any property, rights, and assets vested in the body corporate under subsection (2) (after deducting the value of any liabilities so vested).

    (2) 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 any property, rights, assets, and liabilities of the overseas insurer relating to its New Zealand business will vest in the body corporate referred to in subsection (1)(a) on a date specified in the order (and the property, rights, assets, and liabilities vest in the body corporate on the date specified).

    (3) Nothing in subsection (2) reduces, extinguishes, or affects any obligation or liability of an overseas person.

    (4) Every body corporate referred to in subsection (1)(a) is, for the purposes of this subpart, deemed to be a licensed insurer subject to statutory management as if the body corporate had been declared to be subject to statutory management under this subpart.

    (5) The statutory manager in respect of the overseas person is the statutory manager of the body corporate referred to in subsection (1)(a) as if the statutory manager had been appointed under section 168, and the provisions of this subpart apply accordingly.

184 Vesting of property subject to security

  • (1) An order may be made under section 183 vesting any property, rights, and assets of an overseas person in a body corporate formed and registered under that section despite the existence, or the terms and conditions, of any security over the property, or over those rights or assets, in favour of any other person.

    (2) Any property, rights, or assets that are declared to vest under an order made under section 183 in the body corporate, being property, rights, or assets subject to a security in favour of any other person, continue to be subject to the security.

185 Proof of vesting

  • (1) No registrar is obliged solely by reason of section 183 to change the name of any overseas person referred to in that section to that of any body corporate formed and registered under that section in any books or registers or in any document.

    (2) The presentation to any registrar or other person of any instrument, whether or not comprising an instrument of transfer, by the body corporate is, in the absence of evidence to the contrary, sufficient proof that the property is vested in the body corporate if the instrument—

    • (a) is executed or purports to be executed by the body corporate; and

    • (b) relates to any property held by the overseas person before the date specified in an Order in Council made under section 183; and

    • (c) contains a statement that the property has become vested in the body corporate by virtue of the provisions of that section.

    (3) In this section, registrar means the Registrar-General of Land, a Registrar of Deeds, or any other person charged under any enactment with the keeping of any books or registers.

186 Provisions applying if liabilities included in sale

  • If all or any part of any liability of a body corporate formed and registered under section 183(1), or all or any part of any liability relating to the New Zealand business of any overseas person, is included in a sale or other disposition referred to in section 50 of the Corporations (Investigation and Management) Act 1989 (as applied by section 178), nothing in section 53(a) of that Act relieves any overseas person from any obligation in respect of that liability.

Obligations incurred by statutory manager

187 Obligations incurred by statutory manager

  • (1) Any obligations incurred by a statutory manager of a licensed insurer in the course of his or her duties as statutory manager are incurred by that statutory manager on behalf of the insurer, and the statutory manager does not incur personal liability for those obligations.

    (2) In the winding up or liquidation of a licensed insurer, an associated person of a licensed insurer, or a subsidiary of a licensed insurer, all amounts required to satisfy obligations incurred by the statutory manager on behalf of the insurer, associated person, or subsidiary must be paid in priority to all other debts.

Value of contracts of insurance

188 Statutory manager may value policies

  • (1) The statutory manager of a licensed insurer may determine the amount of the liability of the insurer to each policyholder under each contract of insurance entered into in New Zealand by the insurer in the manner and on the basis that the statutory manager decides.

    (2) The statutory manager must give to each policyholder notice in writing of the amount of the liability of the insurer under the policyholder's contract of insurance as determined under subsection (1).

    (3) The amount of the liability of the licensed insurer, as determined by the statutory manager under subsection (1), is binding upon each policyholder to whom notice is given under subsection (2).

189 Value of contracts of insurance may be reduced by Order in Council

  • (1) This section applies to a licensed insurer that is in statutory management.

    (2) The Governor-General may, by Order in Council, on the advice of the Minister given in accordance with a recommendation of the Bank, reduce the value of 1 or more of the licensed insurer’s contracts of insurance.

    (3) The Order in Council may provide for the reduction to be on the terms and subject to the conditions (if any) that are specified in the order.

Auditor, actuary, and annual financial statements and records

190 Appointment of auditor and actuary

  • (1) The statutory manager of a licensed insurer must appoint 1 or more persons (whether as individuals or as the members of any firm or firms) to be the auditor of the insurer, being a person or persons who are qualified for appointment as an auditor of a company under the Companies Act 1993 and who have been approved by the Bank.

    (2) The statutory manager of a licensed insurer must appoint a person to be the appointed actuary of the insurer, being a person who has been approved by the Bank.

    (3) Every appointment must be for a term not exceeding 2 years, but any person appointed as auditor or actuary continues in office until a successor comes into office.

    (4) A person appointed as auditor or actuary is eligible for reappointment.

    (5) The auditor or actuary must be paid the fees that are fixed by the statutory manager with the approval of the Bank.

    (6) Every auditor and every actuary has a right of access at all times to the books and papers of the licensed insurer, and is entitled to require from its officers and employees the information and explanations that the auditor or actuary thinks necessary for the performance of the auditor's or actuary's duties (as the case may be).

191 Prior auditor or actuary ceases to hold office

  • A person holding office as auditor or appointed actuary of a licensed insurer at the time that it is declared to be subject to statutory management ceases to hold that office but may be appointed under section 190 as auditor or appointed actuary (as the case may be) of the insurer.

192 Removal of auditor or actuary

  • (1) An auditor or actuary appointed under section 190 may be removed from office by the Minister in accordance with a recommendation of the Bank, by notice in writing to the auditor or actuary, for inability to perform the functions of the office, bankruptcy, neglect of duty, or misconduct, proved to the satisfaction of the Minister.

    (2) The notice must be published in the Gazette as soon as practicable.

193 Annual financial statements

  • (1) The statutory manager of a licensed insurer must, within 3 months after the end of each financial year or a later date that is approved by the Bank, prepare the following statements showing the financial position of the licensed insurer and its subsidiaries at the end of that year and the results of their trading for that year:

    • (a) a statement of financial position and statement of financial performance of the insurer; and

    • (b) a consolidated statement of financial position and consolidated statement of financial performance of the insurer and its subsidiaries.

    (2) The financial statements must be—

    • (a) signed by the statutory manager; and

    • (b) audited and reported on by the auditor.

194 Annual report by statutory manager

  • (1) The statutory manager of a licensed insurer must, after the end of each financial year, prepare a report on the conduct of the management and the affairs of the licensed insurer and its subsidiaries.

    (2) The report, together with the financial statements and the auditor's report on them, must be submitted to the Minister and the Bank within 7 days after the completion of the auditor's report.

    (3) The report, financial statements, and the auditor's report on them must within 14 days after submission to the Minister be filed,—

    • (a) in the case of a licensed insurer that is a company, with the Registrar of Companies:

    • (b) in the case of any other body corporate, with the person exercising functions corresponding with those of the Registrar of Companies.

Termination of statutory management

195 Termination of statutory management by Order in Council

  • (1) 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 1 or more of the following persons who are subject to statutory management cease to be subject to statutory management:

    • (a) a licensed insurer:

    • (b) an associated person of a licensed insurer:

    • (c) a subsidiary of a licensed insurer.

    (2) A person who is likely to be affected by the making of an Order in Council under section 168 may request the Bank to make a recommendation under subsection (1).

    (3) If an Order in Council is made under subsection (1) declaring that a licensed insurer ceases to be subject to statutory management,—

    • (a) every subsidiary of the insurer, except any subsidiary specified in the order, ceases to be subject to statutory management on the same date as that specified as the date on which, and at the same time as that specified as the time at which, the insurer ceases to be subject to statutory management:

    • (b) the appointment of any person appointed as a statutory manager of every such subsidiary terminates on the date and at the time referred to in paragraph (a).

196 Termination of statutory management on liquidation

  • A licensed insurer, an associated person of a licensed insurer, or a subsidiary of a licensed insurer ceases to be subject to statutory management if the insurer, associated person, or subsidiary, as the case may be, is put into liquidation on the application of the statutory manager.

197 Time of termination

  • (1) If an Order in Council is made under section 195 or a licensed insurer, an associated person, or a subsidiary is put into liquidation,—

    • (a) the person ceases to be subject to statutory management at the specified time; and

    • (b) the appointment of any statutory manager appointed in respect of the person terminates at the specified time.

    (2) In this section, specified time means,—

    • (a) if an Order in Council is made under section 195, the date and time specified in the order:

    • (b) if a liquidator is appointed, the date and time of the liquidator's appointment.

Part 5
Miscellaneous provisions

Provisions relating to Lloyd's

198 Lloyd's underwriters must not carry on insurance business in New Zealand unless Lloyd's holds licence

  • (1) A Lloyd's underwriter must not carry on business in New Zealand that involves entering into contracts of insurance as an insurer with New Zealand policyholders unless Lloyd's holds a licence issued under section 200A or 202.

    (2) A Lloyd's underwriter who fails to comply with subsection (1) commits an offence 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).

199 Lloyd's may apply for licence on behalf of underwriting members

  • (1) Lloyd's may apply for a licence in respect of the insurance business carried on by Lloyd's underwriters.

    (2) Lloyd's application 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) Lloyd's must provide to the Bank the information that is required by the Bank to assist it in determining the application.

    (4) Lloyd's commits an offence if it provides false or misleading information to the Bank for the purposes of the application and is liable, on summary conviction, to a fine not exceeding $1,000,000.

200 Lloyd's fit and proper policy and risk management programme

  • (1) Lloyd's must provide the following to the Bank with its application:

    • (a) a copy of a written policy that complies with subsection (2) (the Lloyd's fit and proper policy); and

    • (b) a copy of a risk management programme that complies with subsection (3) (the Lloyd's risk management programme).

    • (b) a copy of a risk management programme that is relevant to the Lloyd's market (the Lloyd's risk management programme).

    (2) The Lloyd's fit and proper policy must—

    • (a) govern the requirements and other criteria that a person must have or satisfy in order to be, and continue to be, a Lloyd's underwriter, being a policy for the purpose of ensuring that only fit and proper persons are, and continue to be, Lloyd's underwriters; and

    • (b) comply with section 32(2) and (4) (which apply with any necessary modifications) the prescribed requirements.

    • (c) be approved by the FSA.

    (3) The Lloyd's risk management programme must—

    • (a) comply with section 73(2) (which applies with any necessary modifications); and

    • (b) be approved by the FSA.

    (4) In this section and in sections 202 and 205, FSA means the Financial Services Authority established under the Financial Services and Markets Act 2000 (UK) or any other overseas supervisor that acts in relation to insurers in the United Kingdom.

200A Bank must issue temporary licence to Lloyd's pending consideration of its application

  • (1) The Bank must issue a temporary licence to Lloyd's if—

    • (a) Lloyd's has, within 18 months after the commencement of this section, made, or purported to make, an application under section 199; and

    • (b) Lloyd's has taken reasonable steps to—

      • (i) provide a fit and proper policy that complies with section 200(2); and

      • (ii) provide a risk management programme; and

      • (iii) otherwise make the application under section 199 in the manner that is specified by the Bank.

    (2) The licence under subsection (1) remains in force until the earliest of the following:

    • (a) the issue of a licence under section 202:

    • (b) the date that the licence is cancelled under section 203A(4):

    • (c) the date that is 3 years after the commencement of this section.

201 Lloyd's underwriters may carry on insurance business in New Zealand if Lloyd's holds licence

  • (1) If Lloyd's holds a licence issued under section 200A or 202, every Lloyd's underwriter may carry on insurance business referred to in section 198 as if the member Lloyd's underwriter held a licence.

    (2) Every Lloyd's underwriter that carries on insurance business referred to in section 198 under a licence issued under section 200A or 202 must be treated as being a licensed insurer for the purposes of the following provisions (and those provisions apply to the Lloyd's underwriter as a licensed insurer with all necessary modifications):

    • (a) sections 42 to 72:

    • (b) subpart 3 of Part 2 (if the Lloyd's underwriter carries on business as a life insurer):

    • (c) Parts 3 and 4.

    (3) Despite subsection (2), in the case of a licence issued under section 200A, a Lloyd's underwriter is required to comply with requirements imposed by or under the provisions referred to in subsection (2) only to the extent that the conditions of the licence require the underwriter to comply.

    (4) Despite subsection (2), in the case of a licence issued under section 202, the Bank may, by notice to Lloyd's, exempt the Lloyd's underwriters from a requirement imposed by or under the provisions referred to in subsection (2) if the Bank, after taking into account the nature of the Lloyd's market, is satisfied that it would be unduly onerous or burdensome to impose the requirement on those underwriters.

    (5) Subsection (4) is subject to section 228 (which provides for general provisions relating to exemptions).

    (2) Every Lloyd's underwriter that carries on insurance business under subsection (1)—

    • (a) must be treated as being an overseas insurer and a licensed insurer for the purposes of this Act; and

    • (b) is subject to the conditions of the licence issued to Lloyd's; and

    • (c) must take all practicable steps to comply with the Lloyd's fit and proper policy, the Lloyd's risk management programme, and any directions in force under section 205.

    (3) A Lloyd's underwriter commits an offence and is liable, on summary conviction, to a fine not exceeding $500,000 if the Lloyd's underwriter fails to comply with—

    • (a) a condition of the licence issued to Lloyd's; or

    • (b) subsection (2)(c).

202 Issue of licence to Lloyd's

  • (1) Lloyd's is entitled to be issued with a licence if the Bank is satisfied that—

    • (a) every relevant Lloyd's underwriter has the ability to comply with subpart 2 of Part 2 and the regulations (to the extent that those provisions will apply); and

    • (b) every relevant Lloyd's underwriter has the ability to comply with the Lloyd's fit and proper policy and the Lloyd's risk management programme; and

    • (c) in the case of relevant Lloyd's underwriters who carry on, or propose to carry on, business as life insurers, those Lloyd's underwriters have the ability to comply with subpart 3 of Part 2 and the regulations (to the extent that those provisions will apply); and

    • (d) every relevant Lloyd's underwriter has the ability to comply with the proposed conditions of licence (if any); and

    • (d) Lloyd's has the ability to comply with section 203A; and

    • (e) the Lloyd's fit and proper policy is satisfactory; and

    • (f) the Lloyd's risk management programme is satisfactory (having regard to the requirements of section 73(2)); and

    • (g) the nature and extent of prudential supervision by the FSA that applies to Lloyd's and the relevant Lloyd's underwriters is appropriate, having regard to whether it 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

    • (h) every relevant Lloyd's underwriter—

      • (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

    • (i) Lloyd's and every relevant Lloyd's underwriter complies comply with any other prescribed requirements.

    (2) The Bank must, after it has made a decision on the application by Lloyd's for a licence, give written notice of the decision to Lloyd's.

    (3) 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.

    (4) The Bank must give notice of the issue of the licence on the Bank's Internet site.

    (5) In this section, relevant Lloyd's underwriter means a Lloyd's underwriter that will carry on insurance business referred to in section 198 under the licence.

    (6) In this section and section 205, FSA means the Financial Services Authority that has functions conferred on it by or under the Financial Services and Markets Act 2000 (UK) or any other overseas supervisor that acts in relation to insurers in the United Kingdom.

203 Conditions of Lloyd's licence

  • (1) Lloyd's may be issued with a licence under section 200A or 202 unconditionally or subject to any conditions that the Bank thinks fit.

    (1A) The conditions may impose obligations on Lloyd's, any Lloyd's underwriter that will carry on insurance business referred to in section 198 under the licence, or both.

    (2) Section 21 appliesSection 21(1) and (3) apply to the licence with any necessary modifications.

203A Obligations on Lloyd's

  • (1) If Lloyd's holds a licence issued under section 200A, Lloyd's must take all practicable steps to ensure that the following are complied with:

    • (a) the conditions of the licence:

    • (b) the directions given under section 205.

    (2) If Lloyd's holds a licence issued under section 202, Lloyd's must take all practicable steps to ensure that the following are complied with:

    • (a) the Lloyd's fit and proper policy:

    • (b) the Lloyd's risk management programme:

    • (c) the conditions of the licence:

    • (d) the directions given under section 205.

    (3) Lloyd's commits an offence and is liable, on summary conviction, to a fine not exceeding $500,000 if Lloyd's fails to comply with subsection (1) or (2).

    (4) If the Bank is satisfied that Lloyd's has persistently or seriously failed to comply with subsection (1) or (2) or section 206 or 207, the Bank may, by written notice to Lloyd's, cancel its licence.

    (5) The Bank may, for the purpose of facilitating a cancellation under subsection (4), direct a Lloyd's underwriter to arrange, subject to the Bank’s approval, to assign the underwriter's liabilities under contracts of insurance with New Zealand policyholders to 1 or more licensed insurers (and for that purpose, sections 29(2) to (5), 30, and 31 apply with any necessary modifications).

204 Provisions that do not apply in respect of Lloyd's or Lloyd's underwriters

  • Sections 14 to 41, 73 to 81, and 233 to 237 do not apply to Lloyd's or Lloyd's underwriters (except to the extent that any of those provisions are applied under this Part section 203A(5)).

205 Bank may direct that Lloyd’s underwriters must not issue or renew contracts of insurance

  • (1) The Bank may give Lloyd's a direction, in writing, under subsection (2) if it has reasonable grounds to believe that 1 or more of the following apply:

    • (a) as a result of an enactment of an Act of the United Kingdom, a substantial change is made in the constitution, powers, rights, or obligations of Lloyd’s or of Lloyd’s underwriters:

    • (b) as a result of a making of a bylaw by Lloyd’s, the rights or obligations of Lloyd’s underwriters are substantially changed:

    • (c) there has been a substantial change in the nature, or extent, of the FSA's supervision of Lloyd's or of Lloyd’s underwriters.

    (2) A direction may do either or both of the following:

    • (a) direct that Lloyd’s underwriters must not enter into contracts of insurance, or undertake liability under contracts of insurance, with New Zealand policyholders:

    • (b) direct that Lloyd’s underwriters must not renew contracts of insurance with New Zealand policyholders.

206 Agent of Lloyd’s and address for service

  • (1) Lloyd’s must at all times during which it holds a licence—

    • (a) be represented for the purposes of this Act by an individual resident in New Zealand who is appointed by Lloyd’s as the agent of Lloyd’s for the purposes of this Act; and

    • (b) have an address in New Zealand for service for the purposes of this Act.

    (2) Lloyd's must notify the Bank of the matters referred to in subsection (1) and of any changes to those matters.

    (3) Anything done in his or her representative capacity by a person appointed by Lloyd’s as, or to act as, its agent in accordance with this section is taken, for the purposes of this Act, to have been done by Lloyd’s.

207 Lloyd’s to give notice of enactments and bylaws

  • If an Act of the United Kingdom is enacted relating specifically to Lloyd’s, or a bylaw is made under the Acts of the United Kingdom known as the Lloyd’s Acts 1871–1982 or under any later Act of the United Kingdom relating to Lloyd’s, Lloyd’s must, within the period of 21 days after the enactment of the Act or the making of the bylaw, give written notice of that matter to the Bank if there are reasonable grounds to believe that the matter will have a material effect on either or both of the following:

    • (a) the insurance business carried on by any Lloyd's underwriter in New Zealand:

    • (b) any New Zealand policyholder under a contract of insurance entered into by a Lloyd's underwriter.

208 Act does not authorise Lloyd’s underwriter to carry on any business underwriter could not otherwise have carried on

  • Nothing in this Act authorises the carrying on by a Lloyd's underwriter of any business that the underwriter would not have been authorised to carry on if this Act had not been enacted.

Access to information by overseas supervisor

209 Access to information by overseas supervisor

  • (1) For the purpose of the exercise by an overseas supervisor of its supervisory functions, the Bank may authorise an overseas supervisor to do either or both of the following:

    • (a) conduct an inspection of any licensed insurer that is an overseas person:

    • (b) require any licensed insurer that is an overseas person to supply to the overseas supervisor any information, data, or forecasts relating to that person.

    (2) The information, data, or forecasts that an overseas supervisor may be authorised to obtain may include, without limitation, information about the affairs of a particular customer or client of the licensed insurer.

    (3) The Bank may grant an authorisation only if it is satisfied that sufficient provision exists to protect the confidentiality of the information, data, or forecasts obtained or required by the overseas supervisor.

    (4) An authorisation may be—

    • (a) granted for the period or periods that the Bank thinks fit; and

    • (b) varied, revoked, or amended by the Bank.

    (5) The Bank must give notice in writing to a licensed insurer if the Bank—

    • (a) grants an authorisation in relation to that person; or

    • (b) varies, revokes, or amends that authorisation.

    (6) This section has effect despite anything to the contrary in any other enactment or rule of law.

210 Duties of person on receipt of notice under section 209

  • (1) A licensed insurer that is an overseas person must, on receipt of a notice from the Bank under section 209, comply with that notice by, as the case may be,—

    • (a) permitting the overseas supervisor to conduct an inspection of that person; or

    • (b) supplying the overseas supervisor with the required information, data, or forecasts within the time, and at the place, specified in the notice.

    (2) A licensed insurer that is an overseas person commits an offence if the person fails to comply in any respect with any requirements notified by the Bank under section 209 and is liable, on summary conviction, to a fine not exceeding $500,000.

Offences

211 False declarations and representations

  • (1) Every person commits an offence who, for any purpose relating to this Act, either on the person's own behalf or on behalf of any other person,—

    • (a) either orally or in writing, makes any declaration or representation to the Bank or an investigator that, to the person's knowledge, is false or misleading in any material particular; or

    • (b) supplies to the Bank or an investigator any document knowing it to contain any declaration or representation of that kind; or

    • (c) supplies to the Bank or an investigator a document knowing that it is not genuine.

    (2) Every person who commits an offence under this section is liable on summary conviction,—

    • (a) in the case of an individual, to a fine not exceeding $200,000:

    • (b) in the case of a body corporate, to a fine not exceeding $500,000.

    (3) This section does not apply in the case of section 16(4) or 199(4).

212 Liability of directors

  • If a body corporate is convicted of an offence under this Act, every director of the body corporate is guilty of an the offence if it is proved—

    • (a) that the act that constituted the offence took place with his or her authority, permission, or consent; or

    • (b) that he or she—

      • (i) knew, or could reasonably be expected to have known, that the offence was to be or was being committed; and

      • (ii) failed to take reasonable steps to prevent or stop it.

213 Defence for offences against this Act

  • (1) In any prosecution of a person for an offence under this Act, it is a defence if the person proves that—

    • (a) the failure to comply with this Act was due to the act or omission of another person, or some other cause beyond the person's control; and

    • (b) the person took reasonable precautions and exercised due diligence to avoid the failure.

    (2) For the purposes of subsection (1)(a), another person does not include a director, employee, or agent of the person charged with the offence.

    (3) A person is not, without the leave of the court, entitled as part of a defence provided by this section to rely on any of the circumstances specified in subsection (1)(a) unless the person has, not later than 7 working days before the date on which the hearing of the proceedings commences, served on the prosecution a notice in writing identifying the act, omission, or cause relied on by the person.

Prohibition against falsely holding out New Zealand connection

214 Prohibition against falsely holding out New Zealand connection

  • (1) No New Zealand person or overseas company may hold out outside New Zealand that the person carries on insurance business in New Zealand, or that the person is regulated by New Zealand law in respect of insurance business carried on in New Zealand by the person, if the person does not carry on insurance business in New Zealand.

    (2) In this section and section 215,—

    New Zealand person means any of the following:

    • (a) a body corporate or an association of persons incorporated or formed in New Zealand:

    • (b) a person who is ordinarily resident in New Zealand

    overseas company means an overseas company that is required to be registered or deemed to be registered under the Companies Act 1993.

    (3) A New Zealand person or an overseas company that fails to comply with this section commits an offence 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 $200,000.

215 Certain New Zealand persons and overseas companies prohibited from using certain words in name

  • (1) If a New Zealand person or an overseas company does not carry on insurance business in New Zealand, the person cannot—

    • (a) be formed, incorporated, or registered in New Zealand using a name or title that includes a restricted word; or

    • (b) change the person's name or title in New Zealand to a name or title that includes a restricted word; or

    • (c) carry on any activity directly or indirectly in New Zealand (whether through an agent or otherwise) using a name or title that includes a restricted word.

    (2) The restricted words are the following in any language:

    • (a) insurance:

    • (b) assurance:

    • (c) underwriter:

    • (d) reinsurance:

    • (e) any term whose meaning is the same as, or similar to, that of any term in paragraphs (a) to (d).

    (3) A New Zealand person or an overseas company that fails to comply with this section commits an offence 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 $200,000.

216 Prohibition does not apply in certain cases

  • (1) Sections 214 and 215 do not apply to a person if, in connection with any insurance business carried on in New Zealand, that person does any 1 or more of the following:

    • (a) assists in issuing or administering contracts of insurance, or in collecting premiums:

    • (b) acts as an insurance loss adjuster or assessor:

    • (c) arranges, negotiates, solicits, or promotes contracts of insurance or the renewals of contracts of insurance or both (for example, a broker or other insurance intermediary).

    (2) Sections 214 and 215 do not apply to industry associations.

    (3) In this section, industry association means a non-profit association of members who work in the insurance industry and that performs 1 or more of the following functions:

    • (a) representing members' views to non-members, including the Government:

    • (b) providing dispute resolution:

    • (c) providing education and training for members:

    • (d) providing social events for members:

    • (e) establishing rules or codes of conduct.

    (4) The Bank may, by notice in writing to a person, exempt the person from section 215 if the Bank is satisfied that the person—

    • (a) will not be carrying on insurance business in New Zealand; and

    • (b) has a legitimate reason to use the particular word in the person's name.

    (5) Subsection (4) is subject to section 228 (which provides for general provisions relating to exemptions).

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

  • (1) If a licensed insurer is a subsidiary, the constitution of the insurer must not include any provision that permits a director of the insurer to act in a manner that he or she believes is in the best interests of the insurer's holding entity even though it may not be in the best interests of the insurer.

    (1) If a licensed insurer is a subsidiary, a provision in the constitution of the insurer is of no effect to the extent that it purports to permit a director of the insurer, when exercising powers or performing duties as a director, to act in a manner that he or she believes is in the best interests of the insurer's holding entity even though it may not be in the best interests of the insurer.

    (2) Subsection (1) applies despite section 131(2) of the Companies Act 1993.

    (3) In this section, constitution, in relation to a licensed insurer, means,—

    • (a) in the case of a company within the meaning of the Companies Act 1993, the constitution of the company; and

    • (b) in any other case, the documents or instruments constituting or defining the constitution of the 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 $100,000.

    (4) This section does not apply to an overseas insurer.

Ban ordered by District Court

218 Power to ban certain persons from participating in insurance business

  • (1) A District Court may, on the application of the Bank, make an order in respect of a person under subsection (2) if the District Court considers that the person—

    • (a) has, in connection with an insurance business, engaged in an act, omission, or course of conduct that constitutes serious wrongdoing and that the person is not a fit and proper person to participate in insurance business in 1 or more of the ways described in subsection (2); or

    • (b) as a director of a licensed insurer, has persistently or seriously failed to comply with this Act or the regulations; or

    • (c) is a director of a licensed insurer, being an insurer that has persistently or seriously failed to comply with any direction, condition, or other requirement imposed by or under this Act or the regulations, and the person has persistently failed to take reasonable steps to prevent or stop that failure; or

    • (d) is prohibited from participating in an insurance business in 1 or more of the ways specified in subsection (2)(a) to (g) under an order made, or a notice given, under a law of a country, State, or territory outside New Zealand.

    (2) The order is an order banning a person from being or doing 1 or more of the following:

    • (a) being a director of an insurer:

    • (b) being concerned or taking part in the management of an insurer:

    • (c) being a shareholder of an insurer:

    • (d) being an employee or other agent of an insurer:

    • (e) acting under a contract for services with an insurer:

    • (f) being an insurance intermediary:

    • (g) otherwise participating in an insurance business in any other way (whether paid or unpaid).

    (3) Every application to a District Court under this section must be made by an originating application.

    (4) A ban under this section has effect from the date specified in the order even though an appeal may have been lodged under section 220.

    (5) An order may be—

    • (a) made even though the person concerned may be criminally liable for the matters on the grounds of which the order is to be made; and

    • (b) permanent or for a specified time; and

    • (c) subject to the terms and conditions that the District Court thinks fit; and

    • (d) cancelled or varied at any time by the District Court.

    (6) The District Court may make any order in the matter as to costs and otherwise as it thinks fit.

    (7) As soon as practicable after an order is made, the Registrar of the District Court must send a copy of the order to the Bank.

219 Notice of hearing

  • (1) If an application is made for an order under section 218, the Registrar of the District Court must—

    • (a) fix the time and place for the hearing of the application; and

    • (b) as soon as practicable, give notice of the application and of the time and place of the hearing to—

      • (i) the Bank; and

      • (ii) the respondent; and

      • (iii) any other person who appears to the Registrar of the District Court to have a sufficient connection with the proceedings.

    (2) On the hearing of the application,—

    • (a) the Bank must appear and call to the attention of the District Court any matters that seem to the Bank to be relevant, and may give evidence or call witnesses; and

    • (b) the respondent may appear and give evidence or call witnesses; and

    • (c) any person referred to in subsection (1)(b)(iii) may also appear and be heard.

220 Appeals to High Court

  • (1) Any person who has a right to appear and be heard in any proceedings under section 218 may appeal to the High Court if a District Court—

    • (a) has made or refused to make an order under that section; or

    • (b) has otherwise finally determined or has dismissed the proceedings.

    (2) An appeal is by way of rehearing.

221 Appeal to Court of Appeal on question of law

  • (1) Any party to an appeal under section 220 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.

222 Register of banned persons

  • (1) The Bank must keep a register of persons banned under section 218 (the register).

    (2) The register may be—

    • (a) an electronic register; or

    • (b) kept in any other manner that the Bank thinks fit.

    (3) The Bank must take all reasonable steps to ensure that the information contained in the register is available to members of the public at all reasonable times.

223 Search of register

  • (1) A person may search the register in accordance with this Act or the regulations.

    (2) The register may be searched only by reference to the following criteria:

    • (a) in the case of an individual,—

      • (i) the name, or former name, of the person:

      • (ii) the residential or business address of the person:

      • (iii) the person's date of birth:

      • (iv) any combination of the criteria in subparagraphs (i) to (iii):

    • (b) in the case of a body corporate,—

      • (i) the name, or former name, of the body corporate:

      • (ii) the address of the body corporate's registered office:

      • (iii) the address of any place of business of the body corporate:

      • (iv) any combination of the criteria in subparagraphs (i) to (iii).

    (3) A search of the register may be carried out only by the following persons for the following purposes:

    • (a) an individual, or a person with the consent of the individual, for the purpose of searching for information about that individual:

    • (b) a person for the purpose of determining whether or not a person is banned under section 218 (and, if so, the nature and extent of the ban).

    (4) A search of the register for personal information that has not been carried out in accordance with this section constitutes an action that is an interference with the privacy of an individual under section 66 of the Privacy Act 1993.

224 Offence for banned person to participate in insurance business in breach of order

  • A person commits an offence if the person fails to comply with an order under section 218 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.

Notice and service

225 Notice and service of documents

  • (1) Unless this Act provides otherwise, if a provision of this Act requires or authorises any notice or other document, or any notification, to be given or provided to a person, the notice, document, or notification must be given in writing to the person—

    • (a) by delivering it personally or by an agent (such as a courier) to the person; or

    • (b) by sending it by prepaid post addressed to the person at the person's usual or last known place of residence or business; or

    • (c) by sending it by fax or email to the person's fax number or email address provided by the person for the purpose; or

    • (d) in any other manner a District Court Judge directs.

    (2) In the absence of proof to the contrary, a notice, document, or notification sent to a person in accordance with—

    • (a) subsection (1)(b) must be treated as having been given or provided to the person when it would have been delivered in the ordinary course of the post; and, in proving the delivery, it is sufficient to prove that the letter was properly addressed and posted:

    • (b) subsection (1)(c) must be treated as having been given or provided to the person on the second working day after the day on which it is sent.

    (3) If a person is absent from New Zealand, a notice, document, or notification given to the person's agent in New Zealand in accordance with subsection (1) must be treated as having been given or provided to the person.

    (4) If a person has died, the notice, document, or notification may be given, in accordance with subsection (1), to his or her personal representative.

Protection from liability and indemnity

226 Protection from liability

  • (1) This section applies to—

    • (a) the Bank; and

    • (b) every statutory manager of a licensed insurer or of an associated person or of a subsidiary of a licensed insurer; and

    • (c) every officer or employee of the Bank; and

    • (d) every investigator; and

    • (e) every director of the Bank.

    (2) No person to whom this section applies is liable for an act done or omitted to be done in the performance or exercise in good faith of the person's functions, duties, or powers under this Act.

227 Indemnity

  • (1) The Crown indemnifies the persons listed in subsection (2) for any liability that arises from the exercise or purported exercise of, or omission to exercise, any power conferred by this Act unless it is shown that the exercise or purported exercise of, or omission to exercise, the power was in bad faith.

    (2) The persons are—

    • (a) the Bank; and

    • (b) every statutory manager of a licensed insurer or of an associated person or of a subsidiary of a licensed insurer; and

    • (c) every officer or employee of the Bank; and

    • (d) every investigator; and

    • (e) every director of the Bank.

    (3) Any money required for the purposes of this section must be paid out of a Crown Bank Account without further authority than this section.

    (4) The indemnity conferred by subsection (1) extends to legal costs incurred in defending a proceeding.

    (5) Within 12 sitting days of the making of any payment under this section, the Minister must present to the House of Representatives a report that contains details of the circumstances giving rise to the liability of the Crown, the amount of the payment, the person to whom the payment was made, and any other relevant matters.

General provisions relating to declarations and exemptions

228 General provisions relating to declarations and exemptions

  • (1AA) This section applies to a declaration under section 8A (which relates to declarations that persons are not carrying on insurance business in New Zealand in certain circumstances).

    (1) This section also applies to an exemption granted under any of the following sections:

    • (a) section 36 (which relates to exemptions for an overseas insurer from the requirement to provide fit and proper certificates):

    • (b) section 60 (which relates to exemptions for an overseas insurer from compliance with solvency standards):

    • (c) section 117 (which relates to exemptions for an overseas insurer from compliance with statutory fund requirements):

    • (ca) section 201(4) (which relates to exemptions for Lloyd's underwriters):

    • (d) section 216(4) (which relates to exemptions from the prohibition against using certain words in a name).

    (2) The Bank may give a declaration or grant an exemption unconditionally or subject to any conditions that the Bank thinks fit (after taking into account the purposes of this Act and the principles set out in section 4 that are relevant).

    (3) The Bank must make a declaration or an exemption 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.

    (4) The Bank's reasons for granting an exemption (including why an exemption is appropriate) must be notified with the exemption.

    (5) The Bank may amend or revoke an exemption in the same way as an exemption may be granted.

    (4) The Bank's reasons for giving a declaration or granting an exemption (including why it is appropriate) must be notified with the declaration or exemption.

    (5) The Bank may amend or revoke a declaration or exemption in the same way as it may be given or granted.

    (6) Lloyd's may apply for an exemption on behalf of Lloyd's underwriters.

    (6A) A declaration—

    • (a) 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; and

    • (b) must be presented to the House of Representatives in accordance with section 4 of the Regulations (Disallowance) Act 1989.

    (7) To avoid doubt, anAn exemption is not a regulation for the purposes of the Regulations (Disallowance) Act 1989 and the Acts and Regulations Publication Act 1989.

General provisions relating to fit and proper standards and solvency standards

228A Status of standards

  • (1) The following are regulations for the purposes of the Regulations (Disallowance) Act 1989 but are not regulations for the purposes of the Acts and Regulations Publication Act 1989:

    • (a) fit and proper standards:

    • (b) solvency standards.

    (2) Fit and proper standards and solvency standards must be presented to the House of Representatives in accordance with section 4 of the Regulations (Disallowance) Act 1989.

228B Public notice of standards

  • (1) The Bank must give notice of the issue of a fit and proper standard or solvency standard in the Gazette.

    (2) The notice in the Gazette must state—

    • (a) the name of the standard; and

    • (b) a brief description of the nature of the standard; and

    • (c) where copies of the standard are available for inspection and purchase.

    (3) The notice in the Gazette need not contain the text of the standard.

    (4) The Bank must make a fit and proper standard or 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.

228C Consultation

  • (1) The Bank must not issue a fit and proper standard or solvency standard unless—

    • (a) the Bank has consulted 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.

    (3) Any action taken by or on behalf of the Bank before the commencement of this section in consulting persons or representatives of persons on proposed fit and proper standards or solvency standards must be treated as having been taken by the Bank under, and for the purposes of, this section.

228D Bank may amend, revoke, or replace standard

  • (1) The Bank may, by a notice signed by the Governor,—

    • (a) amend or revoke a fit and proper standard or solvency standard:

    • (b) revoke and replace a fit and proper standard or solvency standard.

    (2) Sections 228A to 228C apply, with all necessary modifications, for the purposes of subsection (1).

    (3) However, the Bank is not required to comply with section 228C in respect of an amendment to a fit and proper standard or solvency standard if, in its opinion, the amendment corrects a minor error or is otherwise of a minor nature.

Regulations

229 Regulations

  • (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 for all or any of the following purposes:

    • (a) declaring a class or classes of transactions or matters to be transactions or matters that are not by way of insurance for the purposes of this Act:

    • (b) declaring a public entity to be an entity to which section 8(2)(d) applies:

    • (c) prescribing additional requirements for a person to be entitled to be issued with a licence:

    • (ca) prescribing countries, states, or territories as jurisdictions for the purposes of sections 18(4), 36(2A), and 117(2A):

    • (d) prescribing additional matters for the purposes of section 19(2)(g):

    • (e) prescribing conditions or matters that conditions may relate to for the purposes of section 20(2)(h) or 47(2)(d):

    • (ea) prescribing for the purposes of sections 32(4) and 200(2) requirements that fit and proper policies must comply with, including requirements relating to—

      • (i) processes to be undertaken in assessing whether a person is fit and proper to be appointed to, and hold, a position; and

      • (ii) actions to be taken where a person is assessed as not being fit and proper; and

      • (iii) reassessments to ensure that a person who holds a position remains a fit and proper person:

    • (f) prescribing the manner in which annual gross premium income is determined and the amount of that income for the purposes of section 61(2)(a):

    • (g) prescribing—

      • (ia) the circumstances and manner in which a financial strength rating must contain, or be accompanied by, a reference to an overseas policyholder preference for the purposes of section 61A:

      • (i) the circumstances in which disclosure of an overseas policyholder preference under section 72 must be made (including prescribing to whom and when the disclosure must be made):

      • (ii) the manner in which the disclosure under subparagraph (i) must be made:

    • (h) prescribing types of risk for the purposes of section 73:

    • (i) prescribing auditing and registration requirements in respect of interim financial statements referred to in section 81(3):

    • (ia) declaring a class or classes of contracts not to be life policies for the purposes of section 84:

    • (ib) prescribing matters for the purposes of section 88:

    • (j) prescribing the manner in which amounts are ascertained or calculated, notices are given, applications are made, or records are kept for the purposes of sections 88, 88A, 93, 97, 99, and 109:

    • (ja) prescribing matters relating to the transfer of assets, and the crediting of amounts, to a statutory fund on its establishment for the purposes of sections 88A and 91(ab):

    • (k) prescribing arrangements for the purposes of section 93:

    • (ka) declaring classes of transactions for the purposes of section 96:

    • (kb) prescribing restrictions and requirements for the purposes of section 97:

    • (l) prohibiting investments, or the retention of investments, for the purposes of section 98(2)(d) and prescribing a percentage for the purposes of section 98(3):

    • (m) prescribing matters for the purposes of sections 110 to 113, including prescribing—

      • (i) how the amount of an operating profit or operating loss is to be determined; and

      • (ii) requirements relating to how the operating profit or operating loss must be allocated; and

      • (iii) requirements relating to the amount or proportion of profits (or certain parts of profits) that must be treated as, or added to, policyholders' retained profits of a fund or shareholders' or members' retained profits of fund (including providing for the amount or proportion to be determined or calculated in a specified manner); and

      • (iv) requirements relating to the amount or proportion of losses (or certain parts of losses) that must or may be taken into account in reduction of policyholders' retained profits of a fund or shareholders' or members' retained profits of a fund (including providing for the amount or proportion to be determined or calculated in a specified manner); and

      • (v) how the amount of policyholders' retained profits of a fund, shareholders' or members' retained profits of fund, or shareholders' or members' capital is determined or calculated; and

      • (vi) requirements relating to the distribution of retained profits of a fund and shareholders' or members' capital in relation to a fund (including rules relating to ways in which distributions must or may be made, to whom, and restrictions on distributions):

    • (n) prescribing forms for the purposes of this Act, and prescribing—

      • (i) the inclusion in, or attachment to, forms of specified information or documents:

      • (ii) forms to be signed by specified persons:

    • (o) prescribing fees payable in respect of any matter under this Act or the manner in which fees may be calculated:

    • (p) prescribing procedures, requirements, and other matters for the register kept under section 222, including matters relating to the operation of that register, access to that register, and the location of, and hours of access to, that register:

    • (pa) prescribing transitional or savings provisions relating to the coming into force of subpart 3 of Part 2 (in addition to any other transitional provisions in this Act):

    • (q) providing for any other matters contemplated by this Act, necessary for its administration, or necessary for giving it full effect.

    (2) Regulations made under this section or any other provision of this Act may prescribe different matters in respect of different classes of persons.

    (2A) Regulations made under subsection (1)(pa) may provide that, subject to the conditions that are specified in the regulations, during a specified transitional period,—

    • (a) specified provisions of this Act (including definitions) do not apply:

    • (b) specified provisions repealed or amended or revoked by this Act continue to apply.

    (2B) All regulations made under subsection (1)(pa) that are still in force on the day that is 3 years after the commencement of this section expire on the close of that day.

    (3) The Bank may refuse to perform a function or exercise a power until a prescribed fee is paid.

    (4) Any Order in Council made under subsection (1) may authorise the Bank to refund or waive, in whole or in part and on any conditions as may be prescribed, payment of any fee or amount payable in relation to any person or class of persons.

    (5) Any fee or amount payable to the Bank is recoverable by the Bank in any court of competent jurisdiction as a debt due to the Bank.

229A Regulations may provide for exemptions

  • (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 for all or any of the following purposes:

    • (a) exempting a class of specified persons that have an annual gross premium income (as determined in the manner specified in the regulations) that is less than a specified amount from compliance with—

      • (i) section 18(1)(d) or (ea); or

      • (ii) section 61; or

      • (iii) any provision of section 81; or

      • (iv) subpart 3 of Part 2:

    • (b) exempting a class of specified persons that have an annual gross premium income (as determined in the manner specified in the regulations) that is less than a specified amount from being an issuer for the purposes of the Financial Reporting Act 1993 by virtue of section 4(1)(da) of that Act:

    • (c) prescribing terms and conditions that an exemption under paragraph (a) or (b) is subject to.

    (2) If the terms and conditions of an exemption under subsection (1)(a) or (b) that are prescribed under subsection (1)(c) are not complied with by a person, the exemption does not apply to the person.

    (3) In this section, specified person means—

    • (a) a person that was carrying on insurance business in New Zealand immediately before the commencement of this section; or

    • (b) a friendly society (within the meaning of section 2 of the Friendly Societies and Credit Unions Act 1982).

Repeals and consequential amendments

230 Amendments to Life Insurance Act 1908

  • (1) This section amends the Life Insurance Act 1908.

    (2) Parts 1 and 1A, sections 78 to 79A, and Schedules 2 to 7, 20, and 24 are repealed.

231 Repeals

  • The following Acts are repealed:

    • (a) Insurance Companies' Deposits Act 1953:

    • (b) Insurance Companies (Ratings and Inspections) Act 1994:

    • (c) Mutual Insurance Act 1955.

232 Amendments to other enactments

  • (1) The Reserve Bank of New Zealand Act 1989 is amended in the manner indicated in Part 1 of Schedule 3.

    (2) The enactments specified in Parts 2 and 3 of Schedule 3 are amended in the manner indicated in that schedule.

232A Amendment to Financial Service Providers (Registration and Dispute Resolution) Act 2008

  • (1) This section amends the Financial Service Providers (Registration and Dispute Resolution) Act 2008.

    (2) Schedule 2 is amended by adding the following item:

     Reserve Bank of New ZealandLicensed insurersInsurance (Prudential Supervision) Act 2009

Transitional provisions

232B Bank may approve certain transfers

  • (1) The Bank may, on the request of an insurer that is not a licensed insurer, give its written approval to a transaction that involves,—

    • (a) in the case of an overseas insurer, the transfer of all or part of the insurer's New Zealand insurance business to another insurer; or

    • (b) in the case of any other insurer, the transfer of all or part of the insurer's insurance business to another insurer.

    (2) If the Bank approves a transfer under subsection (1), section 51 (which provides for the effect of an assignment of liabilities for the purposes of the transfer) applies with all necessary modifications as if the insurers were licensed insurers.

    (3) A request for the Bank to give its approval under subsection (1) must be—

    • (a) made within 18 months after the date on which this section comes into force; and

    • (b) made in the manner that is specified by the Bank; and

    • (c) accompanied by payment of the prescribed fee for the request (if any). 

    (4) An insurer that makes a request and every other party to the proposed transfer must provide to the Bank the information that is required by the Bank to assist it in determining whether to give its approval.

    (5) Sections 44 to 46 apply with all necessary modifications in relation to a request under subsection (1) as if the insurers were licensed insurers.

    (6) The Bank may, after considering a request made under subsection (1), by notice in writing to the insurer,—

    • (a) give its approval unconditionally or subject to any conditions that the Bank thinks fit; or

    • (b) refuse to give its approval.

    (7) If the Bank refuses to give its approval, it must give a notice to the insurer that contains a statement of its reasons.

233 Bank must issue provisional licence pending consideration of application

  • The Bank must issue a provisional licence to a person if the Bank is satisfied that—

    • (a) the person was carrying on insurance business in New Zealand immediately before the commencement of this section; and

    • (b) the person has, within 3 months after the commencement of this section, notified the Bank that it—

      • (i) was carrying on insurance business in New Zealand immediately before the commencement of this section; and

      • (ii) intends to continue carrying on insurance business in New Zealand after the date that is 18 months after the commencement of this section; and

    • (c) the person has, within 18 months after the commencement of this section, made, or purported to make, an application under sections 16 and 17; and

    • (d) the person has taken reasonable steps to—

      • (i) provide a fit and proper policy that complies with section 32; and

      • (ii) provide a risk management programme that complies with section 73; and

      • (iii) otherwise make the application in the manner that is specified by the Bank.

234 Bank may also issue provisional licence for insurer that is or will be in run-off

  • The Bank may also issue a provisional licence to a person if the Bank is satisfied that—

    • (a) the person was carrying on insurance business in New Zealand immediately before the commencement of this section; and

    • (b) the person has given to the Bank a notice stating that it intends to cease carrying on insurance business in New Zealand before the date that is 3 years after the commencement of this section.

235 Duration of provisional licence

  • (1) A provisional licence remains in force until the earliest of the following:

    • (a) the issue of a licence under Part 2:

    • (b) the date that the provisional licence is cancelled under subsection (2):

    • (c) the date that is 3 years after the commencement of this section.

    (2) The Bank may cancel a provisional licence if—

    • (a) the holder has asked the Bank, by written notice, to cancel the licence; or

    • (b) the Bank is satisfied that the holder has ceased to carry on insurance business in New Zealand.

236 Provisional licence holder only required to comply with requirements to extent required by conditions

  • (1) A provisional licence holder is required to comply with the specified requirements only to the extent that the conditions of the licence require the holder to comply.

    (2) In this section and section 237, specified requirements means the requirements imposed on a licensed insurer set out in the following:

    • (a) sections 32 to 35 (which relate to fit and proper requirements):

    • (b) sections 53 to 57 and 72 to 81 (which relates to solvency standards, financial strength ratings, risk management, and other matters of prudential regulation):

    • (c) subpart 3 of Part 2 (which relates to statutory funds).

    (3) If an insurer becomes, or will become, an issuer under section 4(1)(da) of the Financial Reporting Act 1993 as a result of a provisional licence being issued to the insurer,—

    • (a) the conditions of the licence may specify the accounting periods or interim accounting periods in respect of which the insurer must be treated as being an issuer under that Act (being periods that commence on or after the date that the licence is issued); and

    • (b) the Financial Reporting Act 1993 applies accordingly.

237 Conditions of licence

  • (1) A provisional licence may be issued subject to—

    • (a) conditions that require the provisional licence holder to comply with the specified requirements in whole or in part and with any modifications, additions, or variations specified in the conditions; and

    • (b) conditions that require the provisional licence holder to take specified actions to bring the holder into compliance with the specified requirements (including setting an appropriate timetable for taking those actions to ensure that those actions are taken as soon as practicable); and

    • (c) conditions, in the case of a licence under section 234, that require 1 or more of the following:

      • (i) the provisional licence holder to cease entering into all contracts of insurance or contracts of insurance of a particular kind (whether by way of renewal or otherwise):

      • (ii) the provisional licence holder to arrange for the transfer of all or part of the holder's insurance business to another person in the manner specified in the condition:

      • (iii) the provisional licence holder to otherwise take specified actions to ensure that the holder ceases to carry on insurance business in New Zealand before the date that is 3 years after the commencement of this section (including setting an appropriate timetable for taking those actions); and

    • (ca) a condition under section 236(3); and

    • (d) any other conditions that the Bank thinks fit.

    (2) The Bank may, at any time after a provisional licence is issued, by notice in writing to the provisional licence holder,—

    • (a) impose conditions of the provisional licence (whether or not the licence is already subject to conditions); or

    • (b) vary, remove, add to, or substitute any conditions of the provisional licence.

    (3) The Bank must not exercise a power referred to in subsection (2) unless—

    • (a) the Bank gives the provisional licence holder 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 provisional licence holder has a reasonable opportunity to make submissions to the Bank; and

    • (d) the Bank has regard to those submissions.

238 Public Trust must return deposits

  • (1) Public Trust must return to a depositor a deposit made with Public Trust under the Insurance Companies' Deposits Act 1953, the Life Insurance Act 1908, or the Mutual Insurance Act 1955 within 30 days of after the earliest of the following:

    • (a) the date that Public Trust receives a notice from the Bank under subsection (2):

    • (b) in the case of a non-licensed depositor, the date that is 18 months after the commencement of this section:

    • (c) the date that is 3 years after the commencement of this section.

    (2) The Bank must give a notice for the purposes of subsection (1)(a) in respect of a depositor if the depositor has been issued with a licence under Part 2 or section 202.

    (3) If, before a deposit is returned under this section, the depositor is put into liquidation in New Zealand,—

    • (a) subsection (1) does not apply; and

    • (b) the deposit must be applied and otherwise dealt with in accordance with the Insurance Companies' Deposits Act 1953 or the Life Insurance Act 1908 (as the case may be) as if this Act had not been enacted.

    (4) Until a deposit is returned under this section or is otherwise withdrawn, the Insurance Companies' Deposits Act 1953 or the Life Insurance Act 1908 (as the case may be) continues to apply to the deposit as if this Act had not been enacted.

    (5) Every return of securities made for the purposes of this section must be made as follows (unless the depositor otherwise directs in a written notice given to Public Trust):

    • (a) in the case of securities that are payable to bearer, by the delivery of the securities by Public Trust to the depositor:

    • (b) in the case of securities that are not payable to bearer, by the transfer of the securities by Public Trust to the depositor.

    (6) In this section,—

    depositor means a person who has made any deposit with Public Trust under the Insurance Companies' Deposits Act 1953, the Life Insurance Act 1908, or the Mutual Insurance Act 1955

    non-licensed depositor means a depositor that, on the date that is 18 months after the commencement of this section, does not hold any licence issued under this Act (whether a provisional licence or a licence issued under Part 2 or section 200A or 202).

239 Deposit may be withdrawn in accordance with Insurance Companies' Deposits Act 1953 or Life Insurance Act 1908

  • A deposit may be withdrawn in accordance with section 3A, 8, 9, or 19 of the Insurance Companies' Deposits Act 1953 or section 6, 11, or 12 of the Life Insurance Act 1908 (which continue to apply despite the repeal of those enactments).

Schedule 1
General provisions relating to incorporation by reference

s 58

1 Material incorporated by reference into solvency standards

  • (1) Material may be incorporated by reference into a solvency standard—

    • (a) in whole or in part; and

    • (b) with any modifications, additions, or variations specified in the solvency standard.

    (2) Material incorporated by reference—

    • (a) is the material as it exists at the time the solvency standard is issued; and

    • (b) has legal effect as part of the solvency standard for all purposes, except as provided in clauses 7 and 8.

2 Proof of material incorporated by reference

  • (1) A copy of any material incorporated by reference in a solvency standard must be—

    • (a) certified by the Governor as a correct copy of the material; and

    • (b) retained by the Bank.

    (2) The production in proceedings of a certified copy of the material is, in the absence of evidence to the contrary, sufficient evidence of the incorporation of the material into the solvency standard.

3 Access to material incorporated by reference

  • (1) The Bank—

    • (a) must make copies of all material incorporated by reference in a solvency standard available for inspection during normal working hours at the head office of the Bank; and

    • (b) must make copies of the material available for purchase at a reasonable price from the head office of the Bank; and

    • (c) may make copies of the material available in any other way that the Governor considers appropriate in the circumstances (such as on an Internet site); and

    • (d) must give notice in the Gazette of how the material is available for inspection and purchase.

    (2) Subclause (1) applies to material when it is first incorporated into a solvency standard, and to any subsequent amendment or replacement of material that is incorporated into the standard.

    (3) A failure to comply with this clause does not invalidate a solvency standard.

4 Effect of amendments to, or replacements of, material incorporated by reference

  • An amendment to, or replacement of, material incorporated by reference in a solvency standard has legal effect as part of the standard only if—

    • (a) the amendment or replacement material is made by the person or organisation that made the original material; and

    • (b) the amendment or replacement material is of the same general character as the original material; and

    • (c) a subsequent solvency standard states that the particular amendment or replacement material has legal effect as part of the standard.

5 Effect of expiry of material incorporated by reference

  • Material incorporated by reference in a solvency standard that expires, is revoked, or ceases to have effect, ceases to have legal effect as part of the standard only if a subsequent solvency standard states that the material ceases to have that legal effect.

6 Consultation before material incorporated by reference

  • (1) This clause applies if—

    • (a) the Bank proposes to incorporate material by reference into any solvency standard; or

    • (b) the Bank proposes to issue a solvency standard adopting amended or replacement material.

    (2) If any of the things referred to in subclause (1) are proposed, the Bank—

    • (a) must make copies of the material (which in this subclause includes any amended or replacement material) proposed to be incorporated by reference available for inspection during normal working hours at the head office of the Bank; and

    • (b) must make copies of the material available for purchase at a reasonable price from the head office of the Bank; and

    • (c) may make copies of the material available in any other way that the Governor considers appropriate in the circumstances (such as on an Internet site); and

    • (d) must give notice in the Gazette of how copies of the material may be inspected and purchased, and how people may make comments on the proposal; and

    • (e) must allow a reasonable opportunity for people to comment on the proposal; and

    • (f) must consider any comments made within the time allowed.

    (3) A failure to comply with this clause does not invalidate a solvency standard.

7 Acts and Regulations Publication Act 1989 not applicable

  • The Acts and Regulations Publication Act 1989 does not apply to material incorporated by reference in a solvency standard, or to any amendment to, or replacement of, the material.

8 Application of Regulations (Disallowance) Act 1989 to material incorporated by reference

  • (1) Nothing in section 4 of the Regulations (Disallowance) Act 1989 requires material that is incorporated by reference in a solvency standard to be laid before the House of Representatives.

    (2) The Regulations (Disallowance) Act 1989, apart from the modification to the application of section 4 of that Act made by subclause (1), applies to a solvency standard that incorporates material by reference.

Schedule 2
General provisions relating to search powers

s 130

Search warrants

1 Interpretation

  • In this schedule, unless the context otherwise requires,—

    applicant means an investigator

    evidential material, in relation to an investigation by an investigator, means evidence or any other item, tangible or intangible, of relevance to the investigation

    issuing officer means a Judge of the High Court or a District Court Judge

    thing includes an intangible thing (for example, an email address or access information to an Internet data storage facility).

2 Application for search warrant

  • (1) An application for a search warrant must contain, in reasonable detail, the following particulars:

    • (a) the name of the applicant:

    • (b) the provision authorising the making of the application:

    • (c) the grounds on which the application is made (including the reasons why the legal requirements for issuing the warrant are believed by the applicant to be satisfied):

    • (d) the address or other description of the place proposed to be entered and searched:

    • (e) a description of the item or items or other evidential material believed to be in or on or part of the place that is or are sought by the applicant:

    • (f) the period for which the warrant is sought:

    • (g) if the applicant wants to be able to execute the warrant on more than 1 occasion, the grounds on which execution on more than 1 occasion is believed to be necessary.

    (2) The issuing officer may require the applicant to supply further information concerning the grounds on which the search warrant is sought.

    (3) The applicant must disclose in the application—

    • (a) details of any other application for a search warrant that the applicant knows to have been made within the previous 3 months in respect of the place proposed to be searched; and

    • (b) the result of that application or those applications.

    (4) The applicant must, before making an application for a search warrant, make reasonable inquiries within the Bank, for the purpose of complying with subclause (3).

    (5) The issuing officer may authorise the search warrant to be executed on more than 1 occasion during the period in which the warrant is in force if he or she is satisfied that this is required for the purposes for which the warrant is being issued.

    (6) An application for a search warrant must contain or be accompanied by a statement by the applicant confirming the truth and accuracy of the contents of the application.

3 Mode of application for search warrant

  • (1) An application for a search warrant—

    • (a) must be in writing, unless subclause (3) applies; and

    • (b) may be transmitted to the issuing officer electronically.

    (2) The applicant must appear in person before, or communicate orally with, the issuing officer, unless subclause (4) applies.

    (3) An issuing officer may allow an application for a search warrant to be made orally (for example, by telephone call) or by personal appearance and excuse the applicant from putting all or any part of the application (including any required material) in writing if—

    • (a) the issuing officer is satisfied that the delay that would be caused by requiring an applicant to put all or any part of the application (including any required material) in writing would compromise the effectiveness of the search; and

    • (b) the issuing officer is satisfied that the question of whether the warrant should be issued can properly be determined on the basis of an oral communication or a personal appearance (together with the material described in paragraph (c)); and

    • (c) the information required by clause 2(1) to (3) is supplied (whether orally, or partly orally and partly in writing) to the issuing officer.

    (4) An issuing officer may allow an application for a search warrant to be made without either an appearance in person or an oral communication with the issuing officer if—

    • (a) the issuing officer is satisfied that the question of whether the search warrant should be issued can properly be determined on the basis of any written communication by the applicant (including the material described in paragraph (b)); and

    • (b) the information required by clause 2(1) to (3) has been supplied to the issuing officer; and

    • (c) the issuing officer is satisfied that there is no need to ask any questions of, or seek any further information from, the applicant.

    (5) An issuing officer who allows an application for a search warrant to be made under subclause (3) must record the grounds for the application as soon as practicable.

4 Retention of documents

  • (1) A copy (whether in electronic form or otherwise) of every written application for a search warrant, or (in the case of an oral application) the record of the application made by the issuing officer, must be retained under the control of the Registrar of the District Court at which, or under the control of the Registrar of the District Court that is closest to the place at which, the application was made, until,—

    • (a) in a case where a search warrant is issued, the completion of any proceedings in respect of which the validity of the warrant may be in issue; and

    • (b) in any other case, the expiry of 2 years after the records were first retained under the control of the Registrar of a District Court.

    (2) An applicant to whom a search warrant is issued must retain (whether in electronic form or otherwise) the warrant, a copy of the application (if made in written form), and all documents tendered by the applicant in support of the application, until,—

    • (a) in the case of a warrant that is executed, the completion of any proceedings in respect of which the validity of the warrant may be in issue; and

    • (b) in any other case, the destruction or transfer of the warrant and other documents is required by the Public Records Act 2005 or any other enactment or rule of law.

5 Restrictions on issue of search warrant

  • An issuing officer must not issue a warrant to seize any thing held by a lawyer that is a communication of a kind to which legal professional privilege normally applies unless the issuing officer is satisfied that the information provided by the applicant indicates that the thing was made, received, completed, or prepared—

    • (a) for a dishonest purpose; or

    • (b) for the purpose of planning or committing an offence.

6 Form and content of search warrant

  • (1) Every search warrant issued must be in the prescribed form.

    (2) Every search warrant issued must be directed to every person who has authority to execute the warrant.

    (3) A search warrant may be—

    • (a) executed by any or all of the persons to whom it is directed:

    • (b) subject to any conditions specified in the warrant that the issuing officer considers reasonable, including (without limitation)—

      • (i) any restriction on the time of execution that is reasonable:

      • (ii) a condition that the occupier or person in charge of a place must provide reasonable assistance to a person executing the warrant if, in the absence of such assistance, it would not be practical to execute the warrant without undue delay:

    • (c) executed only once, unless execution on more than 1 occasion has been authorised.

    (4) Every search warrant must contain, in reasonable detail, the following particulars:

    • (a) the name of the issuing officer and the date of issue:

    • (b) the provisions authorising the issue of the warrant (including, where relevant, the suspected offence or offences):

    • (c) that the person executing the warrant may use any assistance that is reasonable in the circumstances:

    • (d) that any person authorised to do so may execute the warrant:

    • (e) that the person executing the warrant may use any force that is reasonable in the circumstances to enter or break open or access any area within the place being searched, or the thing found:

    • (f) the address or description of the place that may be searched:

    • (g) a description of what may be seized:

    • (h) the period during which the warrant may be executed, being—

      • (i) a period specified by the issuing officer not exceeding 14 days from the date of issue; or

      • (ii) if the issuing officer is satisfied that a period of longer than 14 days is necessary for execution, a period specified by the issuing officer not exceeding 30 days from the date of issue:

    • (i) any conditions specified by the issuing officer under subclause (3)(b):

    • (j) if the warrant may be executed on more than 1 occasion, the number of times that the warrant may be executed:

    • (k) if the warrant is intended to authorise the remote access and search of things such as Internet data storage facilities that are not situated at a physical location that can be searched, the access information that identifies the thing to be searched remotely:

    • (l) an explanation of the availability of relevant privileges and an outline of how any of those privileges may be claimed.

    (5) A person is not required, as a consequence of a condition imposed under subclause (3)(b)(ii), to give any information tending to incriminate the person.

7 Transmission of search warrant

  • If it is not possible or practicable for the person charged with executing the warrant to have it in his or her possession at the time of execution, one of the following documents (which is deemed for all legal purposes to constitute the warrant) may be executed:

    • (a) a facsimile, or a print-out of an electronically generated copy, of a warrant issued by the issuing officer:

    • (b) a copy made by the person to whom the warrant is directed, at the direction of the issuing officer and endorsed to that effect.

8 When search warrant executed

  • A search warrant is executed when the person executing the warrant and any person assisting in the execution of the warrant—

    • (a) has seized all the items specified in the warrant; or

    • (b) leaves the place being searched and does not return within 4 hours.

9 When search warrant invalid

  • (1) A search warrant is invalid—

    • (a) if, having regard to the information contained in the application, the grounds or conditions for lawful issue of a warrant set out in section 130 were not satisfied at the time the search warrant was issued:

    • (b) if the warrant contains a defect, irregularity, omission, or want of form that is likely to mislead anyone executing or affected by the warrant as to its purpose or scope.

    (2) If a warrant is invalid under this section, section 204 of the Summary Proceedings Act 1957 does not apply to that warrant.

Carrying out inspection and search powers

10 Application

  • For the purposes of this schedule, search power means—

    • (a) every search warrant issued under this Act; and

    • (b) every power conferred under this Act to enter and search (without warrant) any place.

11 Search powers

  • Every search power authorises the person exercising it—

    • (a) to enter and search the place that the person is authorised to enter and search, and any item or items found in that place, at any time that is reasonable in the circumstances:

    • (b) to request any person to assist with the entry and search (including, without limitation, a member of a hapu or an iwi if the place to be entered is of cultural or spiritual significance to that hapu or iwi):

    • (c) to use any force that is reasonable for the purposes of the entry and search and the seizure of any item authorised by the search power to be seized:

    • (d) to seize any thing authorised to be seized:

    • (e) to bring and use in or on the place searched any equipment, to use any equipment found on the place, and to extract any electricity from the place to operate the equipment that it is reasonable to use in the circumstances, for the purposes of carrying out the entry and search:

    • (f) to copy any document, or part of a document, that may lawfully be seized:

    • (g) to access and copy intangible material from computers and other data storage devices located at or accessible from the place searched (including copying by means of previewing, cloning, or other forensic methods either before or after removal for examination):

    • (h) to use any reasonable measures to—

      • (i) gain access to any computer or other data storage device that is at the place to be searched, or that can be accessed from a computer or other data storage device that is at that place; and

      • (ii) create a forensic copy of any material in such a computer or other data storage device:

    • (i) to take photographs, sound and video recordings, and drawings of the place searched, and of any thing found in that place, if the person exercising the power has reasonable grounds to believe that the photographs or sound or video recordings or drawings may be relevant in any proceedings related to the entry and search.

12 Items of uncertain status may be seized

  • If a person exercising a search power is uncertain whether any item found may lawfully be seized, and it is not reasonably practicable to determine whether that item can be seized at the place where the search takes place, the person exercising the search power may remove the item for the purpose of examination or analysis to determine whether it may be lawfully seized.

13 Powers of persons called to assist

  • (1) Every person called on to assist a person exercising a search power is subject to the control of the person with overall responsibility for exercising that power.

    (2) Every person called on to assist a person exercising a search power may—

    • (a) enter the place to be searched:

    • (b) while under the direction of the person exercising the power, use reasonable force in respect of any property for the purposes of carrying out the entry and search and any lawful seizure:

    • (c) search areas within the place that the person exercising the power has determined may lawfully be searched:

    • (d) seize any thing that may lawfully be seized:

    • (e) take photographs, sound and video recordings, and drawings of the place, and things found in the place, if the person exercising the power has determined that those things may be lawfully taken:

    • (f) bring into or onto the place and use any equipment, make use of any equipment found on the place, or extract electricity from the place for the purposes of operating the equipment that the person exercising the power has determined may be lawfully used:

    • (g) access and copy intangible material from computers and other data storage devices located at or accessible from the place searched (including copying by means of previewing, cloning, or other forensic methods either before or after removal for examination):

    • (h) copy any document, or part of a document, that the person exercising the power has determined may be lawfully copied:

    • (i) use any reasonable measures to—

      • (i) gain access to any computer or other data storage device that is at the place to be searched, or that can be accessed from a computer or other data storage device that is at that place; and

      • (ii) create a forensic copy of any material in such a computer or other storage device.

    (3) If a constable is assisting another person exercising the search power, the constable may, without any direction or supervision by the person he or she is assisting, exercise any power ordinarily exercisable by the constable.

    (4) The person exercising the search power must—

    • (a) accompany any assistant on the first occasion when the assistant enters the place to be searched; and

    • (b) provide such other supervision of any assistant as is reasonable in the circumstances.

    (5) Subclause (4) does not apply if the assistant is a constable.

14 Limitation on exercise of powers

  • The powers conferred by clauses 11 to 13 are subject to—

    • (a) any conditions imposed under clause 6(3)(b) by an issuing officer who issues a search warrant:

    • (b) clauses 22 to 26 (which relate to privileges).

15 Securing place to be searched

  • (1) The person carrying out a search may, in a manner and for a duration that is reasonable for the purposes of carrying out the search,—

    • (a) secure the place searched, any area within that place, or any thing found within that place:

    • (b) exclude any person from the place searched, or from any area within the place, or give any other reasonable direction to such a person, if the person carrying out the search has reasonable grounds to believe that the person will obstruct or hinder the exercise of the power.

    (2) A person who exercises any power under subclause (1) must on the request of any person affected by the exercise of the power—

    • (a) identify himself or herself; and

    • (b) advise the person affected of the reason and authority for the exercise of the power.

16 Seizure of items in plain view

  • (1) A person who exercises a search power or who is lawfully in any place as part of his or her duties may seize any item or items that he or she, or any person assisting him or her, finds in the course of carrying out the search or as a result of observations at that place, if the person has reasonable grounds to believe that he or she could have seized the item or items under—

    • (a) any search warrant that could have been obtained by him or her under this Act or any other enactment; or

    • (b) any other search power exercisable by him or her under this Act or any other enactment.

    (2) If a person seizes any item or items under subclause (1) in circumstances where he or she is not already exercising a search power, the person may exercise any applicable power conferred by clause 11 in relation to the seizure of the item or items.

17 Duty of persons with knowledge of computer or computer network or other data storage devices to assist access

  • (1) A person exercising a search power at any place may require a specified person to provide access information and other information or assistance that is reasonable and necessary to allow the person exercising the search power to access data held in, or accessible from,—

    • (a) a computer that is at the place being searched:

    • (b) any other data storage device that is at the place being searched.

    (2) In this clause,—

    access information includes access codes, passwords, and encryption keys, and any related information that enables access to a computer or other data storage device

    specified person is a person who—

    • (a) is the owner or lessee of the computer or other data storage device, or is in possession or control of the computer or other data storage device, an employee of any of the above, or any service provider who provides service to the above and holds access information; and

    • (b) has relevant knowledge of—

      • (i) the computer or a computer network of which the computer or other data storage device forms a part; or

      • (ii) measures applied to protect data held in, or accessible from, the computer or other data storage device.

    (3) A specified person may not be required under subclause (1) to give any information tending to incriminate the person.

    (4) Subclause (3) does not prevent a person exercising a search power from requiring a specified person to provide information that—

    • (a) is reasonable and necessary to allow the person exercising the search power to access data held in, or accessible from, a computer or other data storage device that—

      • (i) is at or in the place to be searched; and

      • (ii) contains or may contain information tending to incriminate the specified person; but

    • (b) does not itself tend to incriminate the specified person.

    (5) Subclause (3) does not prevent a person exercising a search power from requiring a specified person to provide assistance that is reasonable and necessary to allow the person exercising the search power to access data held in, or accessible from, a computer or other data storage device that—

    • (a) is at or in the place concerned; and

    • (b) contains or may contain information tending to incriminate the specified person.

    (6) Subclauses (1), (4), and (5) are subject to clauses 22 to 26 (which relate to privileges).

18 Identification and notice requirements for person exercising search power

  • (1) A person exercising a search power must,—

    • (a) before initial entry into or onto the place to be searched,—

      • (i) announce his or her intention to enter and search the place under a statutory power:

      • (ii) identify himself or herself; and

    • (b) before or on initial entry into or onto the place to be searched,—

      • (i) give the occupier (if present) of the place a copy of the search warrant or advice about the enactment (the authority) that authorises him or her to conduct the entry and search; and

      • (ii) produce to the occupier of the place evidence of his or her identity (which may include details of a unique identifier instead of a name).

    (2) The person exercising the search is not required to comply with subclause (1)(a) if he or she has reasonable grounds to believe that—

    • (a) no person is lawfully present in or on the place to be searched; or

    • (b) compliance with subclause (1)(a) would—

      • (i) endanger the safety of any person; or

      • (ii) prejudice the successful exercise of the entry and search power; or

      • (iii) prejudice ongoing investigations.

    (3) The person exercising the search power may use reasonable force in order to effect entry into or onto the place if—

    • (a) subclause (2) applies; or

    • (b) following a request, the person present refuses entry or does not allow entry within a reasonable time.

    (4) If the occupier of a place is not present at any time during the search, the person carrying out the search must,—

    • (a) on completion of the search, leave a copy of the authority referred to in subclause (1)(b)(i) and the notice referred to in subclause (5) in a prominent position at the place; or

    • (b) if this is not reasonably practicable, provide the copy of the authority referred to in subclause (1)(b)(i) and the notice referred to in subclause (5) to the occupier of the place no later than 7 days after the exercise of the power.

    (5) The notice required by subclause (4) is a written notice containing the following particulars:

    • (a) the date and time of the commencement and completion of the search:

    • (b) the name or unique identifier of the person who had overall responsibility for that search:

    • (c) the address of the office to which inquiries should be made:

    • (d) if nothing is seized, the fact that nothing was seized:

    • (e) if anything was seized, the fact that seizure occurred and (if an inventory is not provided at the same time under clauses 19 to 21) that an inventory of the things seized will be provided to the occupier of the place no later than 7 days after the seizure.

    (6) For the purposes of this clause and clauses 19 to 21,—

    • (a) the following persons may not be treated as the occupier of the place:

      • (i) any person who is under 14 years of age:

      • (ii) any person who the person executing the warrant has reasonable grounds to believe is not the occupier of the place:

    • (b) every reference to a copy of the authority referred to in subclause (1)(b)(i) means, in a case where a search is undertaken without a search warrant, written advice about the enactment that authorises the search.

    (7) Subclauses (4) and (5) are subject to clauses 20 and 21.

19 Inventory of items seized

  • (1) The person who carries out a search must, at the time he or she seizes any thing, or as soon as practicable after the seizure of any thing, and in any case not later than 7 days after that seizure, provide to the occupier of the place from where the seizure took place, and to every other person who the person who carried out the search has reason to believe is the owner of the thing that was seized,—

    • (a) written notice specifying what was seized; and

    • (b) a copy of the authority referred to in clause 18(1)(b)(i).

    (2) A written notice referred to in subclause (1)(a)—

    • (a) must contain information about the extent to which a person from whom a thing was seized or the owner of the thing has a right to apply—

      • (i) to have access to the thing; or

      • (ii) to have access to any document relating to the application for a search warrant or the exercise of any other search power that led to the seizure; and

    • (b) must contain information about the right to bring a claim that any privileged or confidential information has been seized; but

    • (c) need not be provided to the occupier of the place from which the seizure took place, if the person who carries out the search is satisfied that none of the items seized are owned by that person.

    (3) If the occupier is not present at the time of seizure, a written notice referred to in subclause (1)(a) and a copy of the authority referred to in clause 18(1)(b)(i) may be provided to that person by leaving the notice in a prominent position at the place.

    (4) Subclause (1) is subject to subclauses (2) and (3).

    (5) This clause is subject to clauses 20 and 21.

20 Compliance with certain provisions may be deferred in certain circumstances

  • (1) A person exercising a search power may apply to a District Court Judge for a postponement of the obligation to comply with clause 18(4) or (5) or 19 on the grounds that compliance would—

    • (a) endanger the safety of any person; or

    • (b) prejudice ongoing investigations.

    (2) An application may be made under subclause (1),—

    • (a) in the case of an entry and search power that is a search warrant, at the time of the initial application or until the expiry of 7 days after the warrant is finally executed; and

    • (b) in the case of any other entry and search power, until the expiry of 7 days after the search power is exercised.

    (3) On an application under subclause (1), the District Court Judge may postpone for a specified period not exceeding 12 months the obligation to comply with clause 18(4) or (5) or 19, if the Judge is satisfied there are reasonable grounds for believing that compliance would—

    • (a) endanger the safety of any person; or

    • (b) prejudice ongoing investigations.

21 Further postponement of, or dispensation from, obligation to comply with certain provisions

  • (1) A person who has obtained an order under clause 20(3) may, before the expiry of that order, apply to a District Court Judge for a further postponement of, or dispensation from, the obligation to comply with clause 18(4) or (5) or 19 on the grounds that compliance would—

    • (a) endanger the safety of any person; or

    • (b) prejudice ongoing investigations.

    (2) An application for a further postponement may be made on only 1 occasion.

    (3) On an application under subclause (1), the District Court Judge may postpone for a further specified period not exceeding 12 months, or order a permanent dispensation from, the obligation to comply with clause 18(4) or (5) or 19 if the Judge is satisfied that compliance would—

    • (a) endanger the safety of any person; or

    • (b) prejudice ongoing investigations.

    (4) A District Court Judge may not grant, under subclause (3), any postponement of, or dispensation from, an obligation in respect of any thing that has been seized, unless the thing seized is—

    • (a) a copy or clone of any information taken or made; or

    • (b) a thing the possession of which by the person from whom it was seized is unlawful under New Zealand law.

Privileges

22 Privileges

  • (1) If a person could, in a criminal proceeding, assert a privilege under sections 54 to 57 of the Evidence Act 2006 in respect of any communication or information, the person is taken to have the same privilege for the purposes of a search warrant or exercise of any other search power under this schedule.

    (2) Subclause (3) applies to documents that are books of account or accounting records kept—

    • (a) by a solicitor in relation to any trust account money that is subject to section 112 of the Lawyers and Conveyancers Act 2006; or

    • (b) by a nominee company that—

      • (i) is subject to practice rules made by the Council of the New Zealand Law Society pursuant to section 96 of the Lawyers and Conveyancers Act 2006; and

      • (ii) is operated by a barrister and solicitor or an incorporated law firm as a nominee in respect of securities and documents of title held for clients.

    (3) The application by subclause (1) of section 54 of the Evidence Act 2006 (which relates to the privilege for communications with legal advisers) does not prevent, limit, or affect—

    • (a) the issuing of a search warrant or exercise of any other search power in respect of a document to which this subclause applies; or

    • (b) the obligation to comply with that search warrant or other search power in respect of a document to which this subclause applies; or

    • (c) the admissibility, in a criminal proceeding for an offence described in the search warrant, or for an offence in respect of which any other search power was exercised, of any evidence that relates to the contents of a document obtained under the search warrant or as the result of the exercise of any other search power.

    (4) A person who has a privilege under this clause has the right—

    • (a) to prevent the search under this Act of any communication or information to which the privilege would apply if it were sought to be disclosed in a proceeding:

    • (b) to require the return of any such communication or information to the person if it is seized or secured by a person exercising a search power pending determination of the claim to privilege.

    (5) Section 65 of the Evidence Act 2006 (which relates to waiver of privilege) applies in respect of any privilege under this clause.

    (6) Nothing in this clause affects the application of section 60 of the Evidence Act 2006 (which relates to the privilege against self-incrimination).

23 Searches affecting privileged materials

  • (1) This clause applies if—

    • (a) a person executes a search warrant; or

    • (b) a person exercising a search power has reasonable grounds to believe that any thing discovered in the search may be the subject of a privilege referred to in clause 22(1).

    (2) If this clause applies, the person responsible for executing the search warrant or other person exercising the search power—

    • (a) must provide to any person who he or she believes may be able to claim a privilege referred to in clause 22(1) a reasonable opportunity to claim it; and

    • (b) may, if the person executing the search warrant or exercising the other search power is unable to identify or contact a person who may be able to claim a privilege, or that person's lawyer, within a reasonable period,—

      • (i) apply to a District Court for a determination as to the status of the thing; and

      • (ii) do any thing necessary to enable that court to make that determination.

24 Interim steps pending resolution of privilege claim

  • If a person executing a search warrant or exercising a search power is prohibited under clause 22 or 23 from searching any thing, the person—

    • (a) may—

      • (i) secure the thing; and

      • (ii) if the thing is intangible (for example, computer data), secure the thing by making a forensic copy; and

      • (iii) deliver the thing, or a copy of it, to the District Court, to enable the determination of a claim to privilege; and

    • (b) must supply to the lawyer or other person who may or does claim privilege a copy of, or access to, the secured thing; and

    • (c) must not search the thing secured, unless no claim of privilege is made, or a claim of privilege is withdrawn, or the search is in accordance with the directions of the court determining the claim of privilege.

25 Claims for privilege for things sought to be seized or seized

  • Any person who wishes to claim privilege in respect of any thing sought to be seized or seized by a person executing a search warrant or exercising a search power—

    • (a) must provide to the person responsible for executing the search warrant or exercising the other search power a particularised list of the things in respect of which the privilege is claimed, as soon as practicable after being provided with the opportunity to claim privilege or being advised that a search is to be, or is being, or has been conducted, as the case requires:

    • (b) if the thing or things in respect of which the privilege is claimed cannot be adequately particularised in accordance with paragraph (a), may apply to a District Court for directions or relief (with a copy of the thing provided under clause 24(b)).

26 Admission of evidence

  • (1) If a District Court upholds a claim to privilege under clauses 22 to 25 in respect of any communication or information, the communication or information to which the privilege applies is not admissible in any proceedings arising from, or related to, the execution of the search warrant or exercise of the other search power, as the case requires.

    (2) Subject to subclause (1), this schedule does not limit or affect the admissibility of any evidence, or the discretion of any court to admit or refuse to admit any evidence, in any proceedings.

Disposal of things seized

27 Disposal of things seized

  • (1) In any proceedings relating to any thing seized under a search warrant or the exercise of any other search power under this schedule, the court may order, either at the trial or hearing or on an application, that the thing be delivered to the person appearing to the court to be entitled to it, or that it be otherwise disposed of in any manner that the court thinks fit.

    (2) The Bank or an investigator may, at any time, unless an order has been made under subclause (1), return the thing to the person from whom it was seized, or apply to a District Court Judge for an order for its disposal.

    (3) On any such application, the District Court Judge may make any order that a court may make under subclause (1).

    (4) If proceedings for an offence relating to the thing are not brought within a period of 3 months of seizure, any person claiming to be entitled to the thing may, after the expiry of that period, apply to a District Court Judge for an order that it be delivered to him or her.

    (5) On any such application, the District Court Judge may—

    • (a) adjourn the application, on any terms that he or she thinks fit, for proceedings to be brought; or

    • (b) make any order that a court may make under subclause (1).

28 Court order for disposal of things seized to be suspended on conviction

  • (1) If any person is convicted in any proceedings for an offence relating to anything for which a search warrant has been issued, and any order is made under clause 27, the operation of the order is suspended,—

    • (a) in any case, until the expiration of the time prescribed by the Summary Proceedings Act 1957 for the filing of a notice of appeal or an application for leave to appeal; and

    • (b) if a notice of appeal is filed within the time so prescribed, until the determination of the appeal; and

    • (c) if application for leave to appeal is filed within the time so prescribed, until the application is determined, and, if leave to appeal is granted, until the determination of the appeal.

    (2) If the operation of any such order is suspended until the determination of the appeal, the court determining the appeal may, by order, cancel or vary the order.

Immunities

29 Immunities in relation to exercise of entry or search powers

  • (1) Every person is immune from civil or criminal liability—

    • (a) for any act done in good faith in order to obtain a search warrant:

    • (b) for any act done in good faith in relation to the execution of a search warrant, if the execution is carried out in a reasonable manner.

    (2) Every person is immune from civil and criminal liability for any act done in good faith in order to exercise an entry power or search power if—

    • (a) the power is exercised by that person in a reasonable manner; and

    • (b) the person believes on reasonable grounds that the preconditions for the exercise of that power have been satisfied.

    (3) Every person is immune from civil and criminal liability for any act done in good faith and in a reasonable manner in order to assist a person to exercise an entry power or a search power or in order to examine or analyse any thing that is seized.

    (4) In any civil proceeding in which a person asserts that he or she has an immunity under this clause, the onus is on that person to prove those facts necessary to establish the basis of the claim.

30 Immunity of Bank

  • If any person is immune from civil liability under clause 29 in respect of anything done or omitted to be done, the Bank is also immune from civil liability in tort in respect of that person's conduct.

Offences

31 False application for search warrant

  • Every person commits an offence, and is liable on summary conviction to imprisonment for a term not exceeding 1 year, who makes an application for a search warrant that contains any assertion or other statement known by the person to be false.

32 Offence of failing to carry out obligations in relation to computer search

  • Every person commits an offence, and is liable on summary conviction to imprisonment for a term not exceeding 3 months, who fails, without reasonable excuse, to assist a person exercising a search power when requested to do so under clause 17.

Schedule 3
Consequential amendments

s 232

Part 1
Amendments to Reserve Bank of New Zealand Act 1989

Paragraph (a) of the definition of financial institution in section 2(1): repeal and substitute:

  • “(a) an insurer that issues, or is liable under, life policies within the meaning of section 6(1) of the Insurance (Prudential Supervision) Act 2009; and includes any branch, division, or office of that insurer; and”.

Section 2(1): insert in its appropriate alphabetical order:

“licensed insurer has the same meaning as in section 6(1) of the Insurance (Prudential Supervision) Act 2009”.

Section 39: insert “or the Insurance (Prudential Supervision) Act 2009” after “this Act”.

Section 41(1): add: “and the Insurance (Prudential Supervision) Act 2009”.

Section 41(2): insert “, or the Insurance (Prudential Supervision) Act 2009,” after “this Act”.

Section 41: repeal and substitute:

“41 Duties of Governor

  • “(1) It is the duty of the Governor to ensure that the Bank carries out the functions imposed on it by—

    • “(a) this Act; and

    • “(b) the Anti-Money Laundering and Countering Financing of Terrorism Act 2009; and

    • “(c) the Insurance (Prudential Supervision) Act 2009.

    “(2) The Governor has the authority, in the performance of those functions, to act in relation to all matters that are not by this Act, or either of the following Acts, required to be dealt with by the Board:

    • “(a) the Anti-Money Laundering and Countering Financing of Terrorism Act 2009:

    • “(b) the Insurance (Prudential Supervision) Act 2009.”

Section 46(1)(b): insert “or of a licensed insurer” after “section 157C”.

Section 49(2)(h)(iii): insert “or a licensed insurer” after “section 157C”.

Section 50(2)(d)(iii): insert “or a licensed insurer” after “section 157C”.

Section 51(5): repeal and substitute:

  • “(5) Subject to any general or special directions given or conditions attached by the Governor, any person to whom any powers or functions are delegated under this section may exercise them in the same manner and with the same effect as if they had been conferred directly by this Act or under either of the following Acts, and not by delegation:

    • “(a) the Anti-Money Laundering and Countering Financing of Terrorism Act 2009:

    • “(b) the Insurance (Prudential Supervision) Act 2009.”

Section 51: add:

  • “(9) To avoid doubt, the Governor's functions and powers include his or her functions and powers under the Insurance (Prudential Supervision) Act 2009.”

Section 51(9): repeal and substitute:

  • “(9) To avoid doubt, the Governor's functions and powers include his or her functions and powers under the following Acts:

    • “(a) the Anti-Money Laundering and Countering Financing of Terrorism Act 2009:

    • “(b) the Insurance (Prudential Supervision) Act 2009.”

Section 53(3)(f)(iii): insert “or a licensed insurer” after “section 157C”.

Section 58(b): insert “or a licensed insurer” after “bank”.

Section 68A: insert “or the Insurance (Prudential Supervision) Act 2009” after “this Part”.

Section 162AB(1)(a) and (b): insert “and under the Insurance (Prudential Supervision) Act 2009” after “5D”.

Part 2
Amendments to other Acts

Accident Compensation Act 2001 (2001 No 49)

Section 123(2)(b)(ii): repeal.

Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (2009 No 35)

Section 5: insert in its appropriate alphabetical order:

“life insurance policy means a life policy within the meaning of section 6(1) of the Insurance (Prudential Supervision) Act 2009”.

Paragraph (a)(xii) of the definition of financial institution in section 5: repeal and substitute:

  • “(xii) issuing, or undertaking liability under, life insurance policies as an insurer:”.

Companies Act 1993 (1993 No 105)

Section 2(1): insert in its appropriate alphabetical order:

“licensed insurer has the same meaning as in section 6(1) of the Insurance (Prudential Supervision) Act 2009”.

Section 223: insert after paragraph (d):

  • “(da) if an amalgamating company is a licensed insurer, a copy of the written approval of the Reserve Bank of New Zealand given under section 42 of the Insurance (Prudential Supervision) Act 2009; and”.

Section 236: insert after subsection (2):

  • “(2A) If the arrangement or amalgamation or compromise involves a transfer or amalgamation that requires the written approval of the Reserve Bank of New Zealand under section 42 of the Insurance (Prudential Supervision) Act 2009, the Court may not make an order under this section unless that approval has been given.”

New section 239EA: insert after section 239E:

“239EA Voluntary administration of licensed insurers

  • If a company is a licensed insurer, this Part applies in respect of the insurer subject to subpart 3 of Part 4 of the Insurance (Prudential Supervision) Act 2009.”

Section 239L: add:

  • “(3) In the case of a licensed insurer, the Court may appoint an administrator on the application of the Reserve Bank of New Zealand or a person referred to in subsection (1) if—

    • “(a) subsection (2)(a) or (b) apply; or

    • “(b) the insurer is failing to maintain a solvency margin (within the meaning of section 6(1) of the Insurance (Prudential Supervision) Act 2009).”

New section 240A: insert after section 240:

“240A Liquidation of licensed insurers

  • If a licensed insurer may be put into liquidation under or in accordance with this Part, this Part applies in respect of the insurer subject to subpart 3 of Part 4 of the Insurance (Prudential Supervision) Act 2009.”

Section 241(2)(c): add:

  • “(vii) in the case of a licensed insurer, the Reserve Bank of New Zealand; or”.

Section 258A: repeal and substitute:

“258A Duty to report suspected offences

  • “(1) A liquidator of a company who considers that an offence that is material to the liquidation has been committed by the company or any director of the company against this Act or any of the following Acts must report that fact to the Registrar:

    • “(a) the Crimes Act 1961:

    • “(b) the Securities Act 1978:

    • “(c) the Securities Markets Act 1988:

    • “(d) the Financial Reporting Act 1993:

    • “(e) the Takeovers Act 1993:

    • “(f) the Insurance (Prudential Supervision) Act 2009.

    “(2) A report made under subsection (1), and any communications between the liquidator and Registrar relating to that report, are protected by absolute privilege.

    “(3) If the company is a licensed insurer, a copy of the report made under subsection (1) must be sent to the Reserve Bank of New Zealand.

    “(4) A copy of a report sent under subsection (3), and any communications between the liquidator and Reserve Bank of New Zealand relating to that report, are protected by absolute privilege.

    “(5) A liquidator who fails to comply with subsection (1) or (3) commits an offence and is liable on conviction to the penalty set out in section 373(2).”

Section 332(b): add “; or” and also the following subparagraph:

  • “(x) enters into a contract of insurance as an insurer with a policyholder in New Zealand (being a contract that is governed by the laws of an overseas country) New Zealand policyholder (within the meaning of section 6(1) of the Insurance (Prudential Supervision) Act 2009).”

Section 373(2)(ma): repeal and substitute:

  • “(ma) section 258A(5) (which relates to the duty of liquidators to report suspected offences):”.

Corporations (Investigation and Management) Act 1989 (1989 No 11)

Section 8: repeal and substitute:

“8 Consultation with Reserve Bank

  • “(1) For the purposes of this section—

    “licensed insurer means a licensed insurer within the meaning of the Insurance (Prudential Supervision) Act 2009

    “registered bank means a registered bank within the meaning of section 2(1) of the Reserve Bank of New Zealand Act 1989.

    “(2) The Registrar must consult the Reserve Bank of New Zealand before—

    • “(a) giving a written notice requiring any licensed insurer or registered bank to supply any information under section 9:

    • “(b) appointing any person to carry out an investigation of the affairs of any licensed insurer or registered bank under section 19:

    • “(c) giving a written notice to any licensed insurer or registered bank that it is considered to be a corporation at risk.

    “(3) The Securities Commission must consult with the Reserve Bank of New Zealand before making a recommendation to the Minister under section 38 in respect of any licensed insurer or registered bank.”

Financial Reporting Act 1993 (1993 No 106)

Section 2(1): insert in its appropriate alphabetical order:

“licensed insurer has the same meaning as in section 6(1) of the Insurance (Prudential Supervision) Act 2009”.

Section 4(1): insert after paragraph (d):

  • “(da) every licensed insurer (other than a Lloyd's underwriter within the meaning of the Insurance (Prudential Supervision) Act 2009 or an insurer that is included in a class of insurers that is the subject of an exemption under section 229A(1)(b) of that Act):”.

Section 16: insert after subsection (1):

  • “(1A) Section 79 of the Insurance (Prudential Supervision) Act 2009 applies in respect of a reporting entity that is a licensed insurer.”

Section 35A: add:

  • “(6) The Securities Commission must not grant an exemption under this section in respect of an issuer that is a licensed insurer.”

Financial Service Providers (Registration and Dispute Resolution) Act 2008 (2008 No 97)

Paragraph (a) of the definition of insurance business in section 4: repeal.

Schedule 2: add:

Reserve Bank of New ZealandLicensed insurersInsurance (Prudential Supervision) Act 2009
Financial Transactions Reporting Act 1996 (1996 No 9)

Definition of life insurance policy in section 2(1): repeal and substitute:

“life insurance policy means a life policy within the meaning of section 6(1) of the Insurance (Prudential Supervision) Act 2009”.

Section 3(1)(b): repeal and substitute:

  • “(b) an insurer that issues, or is liable under, life insurance policies:”.

Friendly Societies and Credit Unions Act 1982 (1982 No 118)

Section 2: insert in its appropriate alphabetical order:

“licensed insurer has the same meaning as in section 6(1) of the Insurance (Prudential Supervision) Act 2009”.

Section 11(3): repeal.

Section 11: insert after subsection (3):

  • “(3A) Subsection (3) does not apply to a licensed insurer.”

Section 42: repeal.

Section 42: add:

  • “(4) This section does not apply to a licensed insurer.”

Section 74(5): add “or licensed insurers”.

Section 76: add:

  • “(5) This section does not apply to a licensed insurer.”

Section 77: add as subsection (2):

  • “(2) This section does not apply to a licensed insurer.”

Injury Prevention, Rehabilitation, and Compensation Act 2001 (2001 No 49)

Section 123(2)(b)(ii): repeal and substitute:

  • “(ii) an insurer that issues, or is liable under, life policies within the meaning of section 6(1) of the Insurance (Prudential Supervision) Act 2009; or”.

Insolvency (Cross-border) Act 2006 (2006 No 57)

Paragraph (h)(i) of article 2 of Schedule 1: repeal and substitute:

  • “(i) a statutory manager appointed under subpart 4 of Part 4 of the Insurance (Prudential Supervision) Act 2009; or”.

Insurance Law Reform Act 1977 (1977 No 14)

New section 12A: insert after section 12:

“12A Application for shares in company not to be contained in proposal for insurance

  • “(1) A form of proposal for insurance that contains or purports to be an application for shares in a company must not be issued by or on behalf of the company.

    “(2) If any person makes a proposal for insurance to a company, the company must not allot shares to that person without first receiving an application for shares that is contained in a document separate from the proposal for insurance.

    “(3) If a company contravenes this section,—

    • “(a) the company commits an offence and is liable on summary conviction to a fine not exceeding $10,000:

    • “(b) every director of the company commits an offence and is liable on summary conviction to a fine not exceeding $10,000 if it is proved—

      • “(i) that the act that constituted the offence under paragraph (a) took place with his or her authority, permission, or consent; or

      • “(ii) that he or she—

        • “(A) knew, or could reasonably be expected to have known, that the offence under paragraph (a) was to be or was being committed; and

        • “(B) failed to take reasonable steps to prevent or stop it.

    “(4) Nothing in this section affects the validity of a policy of insurance or of an allotment of shares of a company.

    “(5) In this section, company has the same meaning as in section 2 of the Companies Act 1993.

    “Compare: 1994 No 117 s 33”.

Life Insurance Act 1908 (1908 No 105)

Section 64: omit “ in the answer of such company given to the tenth question of Schedule 7 hereto”.

Life Insurance Amendment Act 1920 (1920 No 84)

Section 11: repeal.

Privacy Act 1993 (1993 No 28)

Part 1 of Schedule 2: insert in its appropriate alphabetical order:

Insurance (Prudential Supervision) Act 2009Section 222
Proceeds of Crime Act 1991 (1991 No 120)

Paragraph (a) of the definition of financial institution in section 2(1): repeal and substitute:

  • “(a) an insurer that issues, or is liable under, life policies within the meaning of section 6(1) of the Insurance (Prudential Supervision) Act 2009; and includes any branch, division, or office of that insurer; and”.

Part 3
Amendments to regulations

Overseas Investment Regulations 2005 (SR 2005/220)

Regulation 33(1)(k)(ii): revoke and substitute:

  • “(ii) the investment is of funds held in the overseas person's—

    • “(A) Life Insurance Fund within the meaning of section 15 of the Life Insurance Act 1908 if the overseas person carries on any other business; or

    • “(B) statutory fund or funds (within the meaning of section 6(1) of the Insurance (Prudential Supervision) Act 2009):”.

Securities Regulations 2009 (SR 2009/230)

Clause 12(4) of Schedule 5: revoke and substitute:

  • “(4) The date of the latest appointed actuary's report in respect of the life insurance company that has been prepared under section 78 of the Insurance (Prudential Supervision) Act 2009), and the period to which the report relates.”

Clause 13(b): omit “actuarial” and substitute “appointed actuary's”.

Legislative history

29 October 2009Introduction (Bill 95–1)
8 December 2009First reading and referral to Finance and Expenditure Committee

  • 1 This position existed under the Insurance Companies (Ratings and Inspections) Act 1994.