Recommendations
[ Last Updated 31 October 2005 ]
On 17 June 2002, Cabinet agreed to the following changes to the current law governing general insurers:
The following changes will be made to the Insurance Companies (Ratings and Inspections) Act 1994. These will take effect after a two-year transition period:
- all insurers (other than captive and life insurers) must be rated, whether or not they carry on general insurance business;
- ratings will be required to show "financial strength" rather than "claims paying ability";
- brokers need to give details of overseas insurers unless more than four insurers are insuring one risk;
- the Registrar of Companies will select rating agencies and enter into deeds of agreement with them;
- an insurer must give the meaning of the rating when the rating is disclosed; and
- an insurer is required to deliver an actual certificate of rating or credit watch warning for registration in New Zealand within 10 working days of receiving it.
Further amendments to the law, which will also take effect after a two-year transition period, are:
- Only brokers and other agents negotiating, or placing insurance offshore, remain obliged to lodge deposits;
- All insurers carrying on business in New Zealand except captive insurers, life insurers and re-insurers be required to file annual audited returns that comply with Financial Reporting Standard 35 and be subject to a maximum financial penalty of $100,000 (reinforced by the power to prevent the insurer from accepting new business) for failure to comply;
- A register of insurers be maintained by the Registrar of Companies; and
- The Registrar of Companies will be responsible for enforcing the new regime and there will be financial penalties for non-compliance with the new regime.
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