The regulator, which is keen to ensure that the law supports its preferred approach to supervision, noted: “The previous consultations in this stage of the IPSA review have explored: the scope of IPSA and how it applies to different kinds of insurance entities, provisions relating to policyholder security (including solvency capital requirements), and tools for enforcement and distress management.

“This [current] consultation is particularly concerned with how the legislation facilitates supervisory oversight of insurers. We wish to ensure that IPSA provides a solid underpinning for the more proactive and intensive approach to supervision that we have been developing across all the sectors we regulate.”

This time around, RBNZ is examining rules around governance and risk management, supervisory oversight of significant restructuring transactions, and how it gathers and publishes data to support supervisory and market discipline.

“The Reserve Bank’s approach to insurance supervision has gradually evolved over time,” highlighted the regulator. “Under IPSA, we have two core purposes: to promote the maintenance of a sound and efficient insurance sector, and to promote public confidence in the insurance sector.

“Our prudential supervision is underpinned by a ‘three pillars’ approach: market discipline, self-discipline, and regulatory discipline. Calibration of the three pillars is adjusted from time to time to reflect developments in international best practice and changes in domestic circumstances. Over the past decade, we have shifted to placing greater emphasis on regulatory discipline.”

For this insurance governance and supervisory processes consultation, RBNZ is asking the following question, among other things: “Is the system for approving amalgamations, change of control, and transfers appropriate?” Also under the spotlight are key officers, as well as the use of legislation, standards, regulations, and guidance notes.

“Several of the proposals in this consultation concern the empowerment of new standards under IPSA,” said the Reserve Bank. “If these proposals were adopted, the standards would need to be produced once new legislation was in place. Any standards would be developed through a separate policy process, including extensive consultation with stakeholders.

“We do discuss the potential scope of standards, and issues that could be addressed by standards. However, in general, this consultation is not concerned with the detailed content of any standards. In terms of submissions then, we are primarily interested in whether stakeholders think it would be appropriate to empower new standards under IPSA, and high-level comments on scope.”

After this last topic-specific consultation, an omnibus one will span RBNZ’s overall proposals for amendments to IPSA and will also tackle the remaining minor issues.

“The omnibus consultation will predominantly contain relatively settled positions for final confirmation before the legislative process begins,” stated the regulator. “However, there are also a few areas where significant optionality will remain (for example, group supervision).

“We will publish the omnibus consultation in mid-2023. We will then seek Cabinet decisions and proceed to drafting legislation to implement the review. We do not expect primary legislation to be in place before the end of 2026.”