The Reserve Bank of New Zealand (RBNZ) has opened consultation on the exposure draft of a Bill to amend the Insurance (Prudential Supervision) Act 2010 (IPSA). The IPSA reforms represent the most significant update to New Zealand's insurance prudential framework in over a decade, aiming to modernise the framework and better align with international best practice.
Our previous article outlines the policy decisions that the Bill (largely) implements. However, the Bill does include some additional refinements and policy decisions, which we outline below.
Changes to Cabinet recommendations
Non-operating Holding Companies (NOHC) and holding companies: Our previous article reported that Cabinet had proposed introducing a licensing regime for non-operating holding companies of insurers headquartered in New Zealand, to enable group supervision by the RBNZ. The Bill now reflects RBNZ's subsequent recommendation against requiring NOHCs to be licensed at this time, but does provide that prudential requirements may still be imposed on New Zealand holding entities (via the issuance of standards). The RBNZ has indicated that further policy work on the appropriateness of a holding entity licensing regime (which may result in further changes to IPSA) will be undertaken over the medium-long term.
Multi-cell captive insurers: Cabinet initially agreed to include a regulation-making power to treat multi-cell captive insurers as captive insurers under the IPSA, and therefore similarly exempt multi-cell captive insurers from the licensing requirements. The Bill pauses this change, and other proposed changes to regulating multi-cell captive insurers, with the RBNZ having taken the view that additional policy work is required to confirm the most appropriate approach.
Technical refinements: Following Cabinet's decisions, the Minister agreed to further technical refinements consistent with those decisions, reflected in the Bill, including:
- Adding powers to transfer existing insurance contracts from an overseas insurer to a locally incorporated insurer
- Clarifying the relationship between prudential requirements made through standards and the imposition of conditions of licence
- Adding intention requirements to certain offences relating to licences, contravention of remedial notices, confidentiality breaches, making false declarations to the RBNZ, and banned persons participating in insurance businesses
- Updating the statutory management regime to better align with the resolution regime in the Deposit Takers Act 2023.
Our thoughts on the exposure draft of the Bill
As discussed in our article, while this will not be a complete overhaul of insurance prudential supervision it will introduce significant new requirements for insurers. Many insurers will rightly be focused on the significant work required for Contracts of Insurance Act 2024 projects, however regulatory affairs and change management teams should ensure they remain across the implications of IPSA.
Next Steps
Submissions on the exposure draft close at 5pm on 7 July 2026.
Following analysis of submissions, the RBNZ will seek Cabinet approval to introduce the Bill into Parliament in 2027, with legislation expected to be in force by late 2028. Standards development and consultation will follow from 2028, with standards expected to be issued and in effect by 2032.
If you would like to make a submission or discuss the reforms or their implications for your business, please get in touch with our financial services team.
This article was prepared by Andrew Suggate (senior associate) and Janet Liu (senior solicitor).
