6. Questions for Submission
Introduction section
Objectives and Outcomes
1. Are the outcomes being sought from the insurance sector appropriate? If no, are there additional outcomes that should be sought?
2. Are the reasons for regulatory intervention correctly identified? Are there other reasons for regulatory intervention that also require identification?
3. Is there the appropriate mix in the objectives for insurance legislation? Are there any other objectives which should be included?
Problem Identification
4. Do these problems accurately reflect the current insurance sector? Is the magnitude of these problems correctly identified in the discussion?
5. Are there any other problems which have not been identified?
Licensing and Prudential Requirements Section
Proposals
6. Do the above proposals overcome the problems identified in the Introduction section of the discussion paper?
7. Are the proposals consistent with the objectives of regulation outlined in the Introduction?
8. What are the benefits and costs of each proposal to an insurer?
9. What implications do these proposals have for the sector as a whole?
10. Are there any other comments on the proposals made?
Options
Risk Management
11. Should the insurance regulatory regime require high level risk management requirements that are attested to by the insurer's directors annually?
12. What are the costs and benefits of adopting such an option?
Separation of Classes Life/General/Health
13. For the purposes of categorising insurance businesses and granting a licence to operate more than one class of insurance business (general, health and/or life) is accounting separation (with segregated funds) and the option for the Regulator requiring legal separation plus conditions sufficient?
14. What are the costs and benefits of accounting separation (with segregated funds) and/or legal separation plus conditions?
15. Should the requirements be set out in legislation or be set by the Regulator?
Legal Form of Foreign Insurers
16. For the purposes of ring-fencing the New Zealand operations of a foreign insurer operating in New Zealand, is accounting separation (with segregated funds) and the option of the Regulator requiring legal separation and/or further conditions sufficient?
17. What are the costs and benefits of accounting separation (with segregated funds) and/or legal separation for a foreign insurer?
18. Should the requirements be set out in legislation or be set by the Regulator?
Ratings
19. Do ratings provide policyholders and their agents with useful information with which to assess the financial soundness of an insurer and compare one with another?
20. Are they currently used by retail consumers or policyholder agents/advisors in New Zealand?
21. Do ratings provide an effective source of market discipline on insurers?
22. Do ratings assist in promoting the incentives for sound governance and risk management in insurers?
23. In addition to the other prudential requirements, such as governance, risk management and enhanced solvency standards, will ratings act as a sound supplementary tool for the purposes of supervision by the Regulator?
24. Should there be a mandatory requirement that all insurers obtain a financial strength rating from an approved rating agency, subject to a de minimus exemption for very small insurers?
25. Should a mandatory ratings requirement be retained for fire and disaster insurers only?
26. What costs will a rating have for an insurer?
27. Does a mandatory ratings requirement meet the objectives of the regulatory framework?
Transition of Existing Insurers
28. Should there be a fixed transition period for existing insurers or should the Regulator have the ability to approve an insurer's transition period?
29. Other jurisdictions have adopted a "milestone" approach to transitions. This involves implementing set targets that licensed entities much comply with over a defined period in order to comply. Is there merit in considering this approach?
Insurer Appeal Rights for Licensing
30. Should the appeal right for the licensing process carried out by the Regulator be on the basis of merit review or judicial review?
Monitoring and Supervision
Proposals
31. Will the proposals resolve the problems identified in the Introduction section of the discussion paper and enable the Regulator to achieve its supervisory objectives?
32. Are the checks and balances on the regulators use of its powers appropriate?
33. What costs and benefits will these requirements have for insurance businesses?
Market Conduct
Duty of Disclosure and Remedies for Non-Disclosure and Mis-Statements
34. Do you agree with the proposal for the duty of disclosure and remedies?
35. Should the interim cover circumstance giving the right to avoid be limited to 10 days or a longer period?
36. Should the Contractual Remedies Act apply in addition to the proposal above, or where circumstances exist that are not captured by the avoidance or restitution remedies?
37. Should the duty of disclosure be limited and the restitution remedies apply to consumers only, leaving the avoidance remedy in place for business policyholders?
38. What are the costs and benefits of this proposal?
Registration of Life Policy Assignments and Mortgages
39. Should the existing system be retained, or replaced by the notice procedure?
40. What are the costs and benefits of the notice procedure proposal?
Insurance Intermediaries and Agency
41. Are the above proposals appropriate for the New Zealand insurance intermediaries market?
42. What implications will these have for existing market practices?
43. Is this an ideal approach for providing clarity as to when an intermediary is the agent of the insurer or agent of the consumer?
44. What are the costs and benefits of the proposal?
Product Disclosure
Given that further detailed work and consultation is yet to be done on this area:
45. Should there be product disclosure requirements for insurance that are contained in legislation?
46. Is the product disclosure framework set out above a move in the right direction for the insurance sector, or is a different approach to the framework required?
47. What would be the costs and benefits of an insurance product disclosure regime?
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