Insurance Ratings and Deposits Review
The Minister of Commerce announced on 23 August 2002 amendments proposed to the law governing non-life insurers. On 22 March 2004 the Minister announced that the amendments would be postponed, pending the Law Commission's review of life insurance. The review was again placed on hold as the Ministry was undertaking a broader review of financial sector regulation through the Review of Financial Products and Providers. Both reviews would have implications for the regulation of non-life and life insurance, and it would be preferable to make any changes to the regulation of the insurance market at one time.
In 2000/2001, the Ministry carried out a review of the existing law governing general insurers. It found that while the law attempts to protect the consumer against the insolvency of an insurer, there are issues with the current application of both the Insurance Companies’ Deposits Act 1953 and the Insurance Companies (Ratings and Inspections) Act 1994. The former no longer fulfils its original purpose of providing a realistic pool of funds for policyholders when an insurer becomes insolvent and the financial reporting requirements it imposes are inadequate. The latter, while it generally works well, does not apply to all types of insurance products.
Two rounds of consultation targeting key stakeholders and all unrated insurers were carried out. The initial consultation in December 2000-January 2001 sought comment on options for improving the current law. The second round of consultation in November-December 2001 focused on the proposed changes to the current regime. All submissions were taken into consideration when developing the recommendations put to Government.
The work and submissions on the Ratings and Deposits Review and the Law Commission Report on Life insurance are being considered and progressed through the current Review of Financial Products and Providers.
Documents
Contact
For further information please contact:
Brendan Scroope
DDI: 04-470 2310
Fax: 04-499 1791
Email: businesslaw@med.govt.nz
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