Every person who carries on insurance business in New Zealand must hold a licence.

A person who carries on insurance business in New Zealand without holding a licence commits an offence and is liable on conviction,—

A person commits an offence if the person—

Every person who commits an offence under this section is liable on conviction,—

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.

Applications must be—

Every applicant must provide to the Bank the information that is required by the Bank to assist it in determining the application.

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 conviction, to a fine not exceeding $1,000,000.

An applicant must provide to the Bank with its application—

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.

An applicant is entitled to be issued with a licence if the Bank is satisfied that—

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.

For the purposes of subsection (1)(j)(i), the matters are—

The law and regulatory requirements referred to in subsection (1)(j)(i), and the nature and extent of the prudential supervision referred to in subsection (1)(j)(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.

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)(k).

Subsection (2) applies when the Bank is—

The Bank must confine its consideration to the following matters:

A body corporate may be licensed as a licensed insurer unconditionally or subject to any conditions that the Bank may impose under subsection (2).

A licence may be subject to any of the following conditions:

Subsection (2)(c) does not limit subsection (2)(b).

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

The Bank may, at any time after a licence is issued, by notice in writing to the licensed insurer,—

Section 21(2) to (4) apply for the purposes of subsection (1) with all necessary modifications.

The Bank must not exercise a power referred to in subsection (1) unless—

A licensed insurer commits an offence if it fails to comply with a condition of its licence and is liable, on conviction, to a fine not exceeding $500,000.

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.

A licensed insurer that fails to comply with subsection (1) commits an offence and is liable, on conviction, to a fine not exceeding $500,000.

The Bank must, after it has made a decision on an application for a licence, give written notice of the decision to the applicant.

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.

The Bank must give notice of the issue of a licence on the register kept under section 54A.

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

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.

Subsection (2)—

In this section and sections 28 and 30,—

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.

The Bank must, after being notified under section 26 or 27, 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 19(1)(a) to (m) (which are the matters that the Bank must be satisfied of before an applicant is entitled to be issued with a licence).

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):

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 licensed insurer or other person that fails to comply with section 26, 27, or 28(2) commits an offence and is liable, on conviction, to a fine not exceeding $500,000.

The Bank may cancel a licence if the Bank is satisfied that—

The Bank must not, in the case of subsection (1)(a)(ii) to (vi), cancel a licence unless—

The Bank must, as soon as practicable after cancelling a licence, give—

In this section, public notice means that the notice is published—

If the Bank considers that it would, under section 30, 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 32, to assign its liabilities to 1 or more other licensed insurers.

The licensed insurer must—

Subsections (1) and (2) have effect despite section 44(1) (which relates to transfers and amalgamations with the Bank’s approval).

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).

A licensed insurer commits an offence if it fails to comply with this section and is liable, on conviction, to a fine not exceeding $500,000.

A licensed insurer must not assign its liabilities under section 31, and a purported assignment under that section is of no effect, unless the assignment is approved by the Bank under subsection (2).

The Bank may only approve a proposed assignment of an insurer’s liabilities under section 31 if the Bank is satisfied that the assignment is appropriate, having regard to—

The approval must be in writing and may be made subject to specified conditions.

If the Bank approves an assignment, the insurer must—

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 32, the following are taken to have occurred:

Every licensed insurer must—

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.

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.

The fit and proper policy must—

A licensed insurer must obtain the Bank’s approval before its fit and proper policy is amended in a material way.

A licensed insurer that fails to comply with this section commits an offence and is liable, on conviction, to a fine not exceeding $500,000.

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).

However, if the group policy does not comply with the requirements of section 34(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 34(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).

The Bank may issue fit and proper standards for the purposes of section 34(3) that—

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

A fit and proper standard may—

This section is subject to sections 233 to 235 (which provide for general provisions relating to standards).

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.

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.

Subsection (2) applies whether or not a certificate in respect of the director or officer has previously been provided under this section.

The certificate must—

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.

A licensed insurer commits an offence if the insurer fails to comply with this section and is liable, on conviction, to a fine not exceeding $500,000.

The Bank may, by notice to an overseas insurer, exempt the insurer from compliance with section 37(1) to the extent that it relates to the directors of the insurer.

The Bank must, before granting an exemption, be satisfied that the law or regulatory requirements of the home jurisdiction of the insurer—

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.

This section is subject to section 232 (which provides for general provisions relating to exemptions).

This section applies if the Bank, after having regard to the fit and proper matters specified in 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.

If this section applies, the Bank may remove the director or relevant officer from the relevant position from a date specified by the Bank.

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—

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.

This section does not apply in respect of a director of an overseas insurer.

This section has effect despite any contract, employment agreement, enactment, or rule of law, or the terms of the constitution of a licensed insurer.

The Bank must not exercise a power referred to in section 39 unless—

The Bank must exercise the powers conferred by section 39 by giving notice in writing to—

A notice given under subsection (2)(c) is sufficient compliance with section 159 of the Companies Act 1993.

A notice given under this section may be amended, revoked, or replaced in the same way as it may be given.

If a person has been removed from a particular position under section 39, the person may not accept reappointment to the position in breach of a direction given under section 39(3).

A person commits an offence if the person fails to comply with subsection (1) and is liable, on conviction, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $200,000 (or both).

A director or relevant officer or former director or relevant officer who is the subject of a decision of the Bank under section 39 may appeal to the High Court against the decision.

An appeal is by way of rehearing.

A decision against which an appeal is lodged continues in force pending the determination of the appeal unless the High Court orders otherwise.

Any party to an appeal under section 42 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 56 of the Senior Courts Act 2016 applies to any such appeal.

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.

The Court of Appeal, in granting leave, may impose the conditions that it thinks fit, whether as to costs or otherwise.

The decision of the Court of Appeal on any application for leave to appeal, or on an appeal under this section, is final.

A licensed insurer must obtain the written approval of the Bank before—

For the purposes of sections 45 to 53,—

A licensed insurer commits an offence if—

Every licensed insurer that commits an offence under subsection (3) is liable, on conviction, to a fine not exceeding $1,000,000.

This section does not apply in respect of a transfer or amalgamation under section 31, sections 164 to 167, subpart 4 of Part 4, or section 207(5).

A request for the Bank to give its approval under section 44 must be—

A joint request may be made by 2 or more licensed insurers that are parties to the proposed transfer or amalgamation.

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.

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.

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.

A licensed insurer that makes a request under section 45 is liable to pay to the Bank the reasonable costs incurred by the Bank in obtaining the report or reports under section 46 (and in the case of a joint application, the licensed insurers are jointly and severally liable to pay those costs).

An amount payable under subsection (1) is recoverable as a debt due to the Bank in any court of competent jurisdiction.

In considering a request made under section 45, the Bank must have regard to the following matters:

The Bank may, after considering a request made under section 45, by notice in writing to the licensed insurer or insurers,—

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

The approval may be subject to any of the following conditions:

If the Bank refuses to give its approval, it must give a notice to the licensed insurer or insurers that contains a statement of its reasons.

A licensed insurer commits an offence if it fails to comply with a condition of the approval imposed under section 49 and is liable, on conviction, to a fine not exceeding $500,000.

Sections 44 to 50 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 44 (for example, in the case of amalgamating companies, the requirements of Part 13 of the Companies Act 1993).

Nothing in sections 44 to 51 invalidates any transfer or amalgamation made without the written approval of the Bank.

If the Bank approves a transfer under section 44 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:

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).

Subsection (1) is subject to subsection (2).

The Bank must keep a public register of licensed insurers.

The Bank must determine the form of the register and may amend the form as it considers necessary.

The register must include—

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

The Bank may issue solvency standards for the purposes of this Act.

A solvency standard may be expressed to apply in relation to—

A solvency standard may—

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.

In subsection (4), relevant overseas standards means standards relating to solvency or capital that—

This section is subject to sections 233 to 235 (which provide for general provisions relating to standards).

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

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

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.

The Bank must, before granting an exemption, be satisfied that—

This section is subject to section 232 (which provides for general provisions relating to exemptions).

A licensed insurer must have a current financial strength rating that is given by an approved rating agency.

Subsection (1) does not apply to—

The Bank may, by notice to a licensed insurer, exempt the insurer from compliance with subsection (1) if the Bank is satisfied that the insurer has ceased to enter into new contracts of insurance as an insurer.

Subsection (2A) is subject to section 232 (which provides for general provisions relating to exemptions).

Sections 63 to 71 do not apply to—

A licensed insurer commits an offence if it fails to comply with this section and is liable, on conviction, to a fine not exceeding $1,000,000.

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.

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).

The Bank may approve a person as a rating agency for the purposes of this Act.

In deciding whether to approve a person as a rating agency, the Bank must have regard to the following:

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).

If, after conducting the review, the Bank considers that the person should no longer be an approved rating agency, it may revoke the approval.

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.

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.

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.

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.

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.

A licensed insurer that is required to comply with section 60(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—

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.

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 must be treated as having been complied with if—

For the purposes of this section, a matter is not to be taken as having been disclosed unless it is disclosed clearly and prominently.

If a contract of insurance is renewed, the licensed insurer is not required to comply with subsection (1) if—

A licensed insurer commits an offence if it fails to comply with this section and is liable, on conviction, to a fine not exceeding $100,000.

A licensed insurer that does not have a current financial strength rating as a result of section 60(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—

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.

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 must be treated as having been complied with if those matters are disclosed to the policyholder—

For the purposes of this section, a matter is not to be taken as having been disclosed unless it is disclosed clearly and prominently.

A licensed insurer commits an offence if it fails to comply with this section and is liable, on conviction, to a fine not exceeding $100,000.

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.

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 insurance intermediary that relate to that period must be repaid to the policyholder by the insurer.

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—

In this section, a specified licensed insurer means a licensed insurer that is required to comply with section 60(1) or that otherwise has a current financial strength rating given by an approved rating agency.

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—

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.

However, this section does not apply in relation to advertising on an Internet site that is maintained by, or on behalf of, a licensed insurer (but section 67 will apply).

If, 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 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.

In this section, public notice means the notice is published—

A licensed insurer must not—

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.

In this section, rating from a non-approved agency means, in relation to a licensed insurer, an assessment of its financial strength or creditworthiness that is in substance a financial strength rating or credit rating (whether called a rating, grading, scoring, ranking, or by any other name) that is issued or given by an agency that is not an approved rating agency.

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

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.

An overseas insurer commits an offence if it fails to comply with this section and is liable, on conviction, to a fine not exceeding $500,000.

A licensed insurer must be subject to a risk management programme and take all practicable steps to comply with that programme.

The risk management programme must—

The Bank may issue, in the manner that the Bank 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).

A licensed insurer must obtain the Bank’s approval before its risk management programme is amended in a material way.

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),—

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).

However, if the group programme does not comply with the requirements of section 73(2) in any respect, the licensed insurer must prepare a supplementary document that, when taken together with the group programme, ensures that the requirements of section 73(2) are complied with (in which case the insurer’s risk management programme must be taken to be the group programme together with the supplementary document).

A licensed insurer commits an offence if it fails to comply with section 73 and is liable, on conviction, to a fine not exceeding $500,000.

A licensed insurer must have an actuary appointed by the insurer.

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).

The licensed insurer must, within 6 weeks after a person stops being 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 149 or 192).

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.

A person appointed under subsection (1) or (2) may be an employee of the licensed insurer or engaged under a contract for services.

A licensed insurer must ensure that the actuarial information contained in, or used in the preparation of, the financial statements or group financial statements of the insurer referred to in section 81(1) is reviewed by the appointed actuary.

The licensed insurer must take all practicable steps to ensure that the review is completed, and the report referred to in section 78 in respect of the review is prepared, before the date on which the financial statements or group financial statements are required to be given to the Bank under section 81.

The review must be carried out in accordance with an applicable solvency standard.

For the purposes of this section and section 78, actuarial information means—

A licensed insurer commits an offence if it fails to comply with this section and is liable, on conviction, to a fine not exceeding $500,000.

The appointed actuary’s report in respect of a review under section 77 must state—

A licensed insurer must ensure that the auditor’s report that is prepared in respect of the insurer’s financial statements or group financial statements is accompanied by the appointed actuary’s report prepared under section 78 when—

A licensed insurer must ensure that any specified actuary has reasonable access to the accounting records and other documents of the insurer.

A licensed insurer commits an offence if it fails to comply with subsection (1) and is liable, on conviction, to a fine not exceeding $1,000,000.

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.

A director or an employee commits an offence if he or she fails to comply with subsection (3) and is liable, on conviction, to imprisonment for a term not exceeding 3 months or to a fine not exceeding $200,000 (or both).

It is a defence to a director or an employee charged with an offence under subsection (4) if he or she proves that—

In this section, specified actuary, in relation to a licensed insurer, means—

A licensed insurer must ensure that, on or before the date on which the financial statements or group financial statements of the insurer are required to be registered or lodged under any Act,—

A licensed insurer must, within 4 months after the end of the first half of each accounting period of the insurer,—

The interim financial information must—

If subsection (3)(a)(i) applies, the interim financial information must be interim financial statements prepared in respect of—

This section is subject to any exemption under section 238(1)(a)(iii) in respect of any provision of this section.

A licensed insurer commits an offence if it fails to comply with this section and is liable, on conviction, to a fine not exceeding $100,000.

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).

A statutory fund is a fund that—

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 238(1)(a)(iv).

The principal requirements of this subpart in relation to statutory funds may be summarised as follows:

This section is only a guide to the general scheme and effect of this subpart.

For the purposes of this Act, each of the following constitutes a life policy:

However, subsection (1) is subject to subsections (3) and (4) and section 85.

A contract that provides for the payment of a benefit on the death of a person is not a life policy if,—

A contract of insurance is not a life policy if it is of a class declared by the regulations not to be life policies.

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

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.

This section applies to contracts of insurance that provide for both life insurance and non-life insurance.

For the purposes of this subpart,—

The proportion of the premiums that relate to either life insurance or non-life insurance must be determined by the appointed actuary.

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.

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

In this section,—

In this subpart, unless the context otherwise requires,—

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.

For the purposes of this subpart,—

In the investment, administration, and management of the assets of a statutory fund, a life insurer—

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.

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.

An investment by a life insurer is not ineffective merely because it is made in contravention of subsection (1)(b).

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.

Nothing in subsection (1) prevents a life insurer doing anything that the life insurer is permitted by or under this subpart to do.

If a life insurer establishes a statutory fund otherwise than under an approval given under section 109, the life insurer must give the Bank written notice of—

The notice must be given in the prescribed manner.

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

For the purposes of this Act, the assets of a statutory fund at a particular time are the following:

Assets or investments obtained by the application of assets (other than money) of a statutory fund are themselves assets of the fund.