The Insurance (Prudential Supervision) Act 2010 is the statute under which the Reserve Bank prudentially regulates and supervises private insurers in New Zealand, with the twin objectives of maintaining a sound and efficient insurance sector and promoting public confidence in that sector.
In April 2026, the Reserve Bank released an exposure draft of the Insurance (Prudential Supervision) Amendment Bill (the Bill) and opened public consultation closing 28 August 2026.[1] The Bill seeks “to promote the maintenance of a sound and efficient insurance sector, and to promote public confidence in the sector.” The Bill also seeks to bring New Zealand’s insurance sector in line with international practice and with other domestic prudential regimes.[2]
What will it mean for insurers?
Self-reporting – The Bill introduces compliance monitoring which will be a more formal and reportable obligation.[3] This will require insurers to have ways to monitor their own compliance with prudential obligations, and must self-report material contraventions to the Reserve Bank “as soon as practicable.” To incentivise self-reporting, the self-report cannot be used against the insurer in civil or criminal proceedings (except for false reporting).
The Reserve Bank can visit – The RBNZ has new powers which would allow it to conduct on-site inspections without notice.[4] Any employee, director or agent who refuses to answer questions during an inspection commits an offence carrying fines up to $500,000 for a corporate. This will require internal training to deal with such inspections.
Wide-ranging Standards – The RBNZ would be able to issue standards on governance, solvency, risk management, including insurance, operational, cyber, credit, liquidity, market risk, and concentration risk, disclosure, contingency and recovery planning, actuarial advice, outsourcing, and related party exposures.[5] These standards will have very real operational impacts and stakeholders should review and submit on these standards.
Policy documents – There will be standard disclosure obligations which will leave little room for movement. These standards will cover what must be disclosed, to whom, including “policyholders, a particular class of those policyholders, or the public”, in what format, and when.[6]
Warnings about insurers – The RBNZ can direct an insurer to publish its warnings in a prominent position, for example on the insurers website, alerting policyholders and the public to the contravention (or likely contravention) of a prudential obligation. The reputational risk is quite obvious.[7]
What will it mean for brokers?
Distress management: The RBNZ will have the power to direct an insurer not to renew existing contracts of insurance, specifically where it is in “distress”.[8] We anticipate that brokers will want to provide for these scenarios in their contracts with insurers for the sake of their clients and their own remuneration.
Broker’s functions – Broker distribution arrangements will be caught by the new standards.[9] This will mean that insurers should have written governance frameworks around their binder and delegated authority arrangements, potentially including oversight, monitoring, and reporting obligations on those arrangements to the RBNZ.
Immediate actions for insurers
If the Bill proceeds as drafted, the legislation is targeted to come into force in mid to late 2028, the full suite of standards not expected to be complete until 2032.
So the immediate actions for insurers are:
- To engage with the submission process;
- Review the standards when they are available as they have very real practical implications both front end and back end for insurers and brokers; and
- Consider placement agreements with Brokers with a view to the Bill coming into law in 2028.
If you have any questions, please get in touch with Melissa Russell or your usual contact at Hesketh Henry.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.
[1] Submissions can be sent here – ipsareview@rbnz.govt.nz.
[2] RBNZ Review of the Insurance (Prudential Supervision) Act 2010.
[3] Sections 129H (duty to monitor), 129I (duty to report contraventions), 129J (offence for failure), 129K (protection from self-incrimination).
[4] Sections 129E (power to conduct on-site inspection), 129F (power to require answers), 129G (offence for obstruction).
[5] Sections 56E (governance, incorporation, ownership), 56F (solvency), 56G (fit and proper), 56H (risk management and business continuity), 56I (disclosure), 56J (contingency and recovery plans), 56K (actuarial advice), 56L (outsourcing and related party exposures); Section 56D (proportionality framework the RBNZ must publish).
[6] Section 56I (disclosure standard-making power, including 56I(2)(b) specifying “policyholders, a particular class of those policyholders, the public, or a particular class of the public” as potential recipients).
[7] Section 129S (Bank may require its warning to be disclosed), Section 129T (procedural requirements before such an order is made).
[8] Section 144(1)(b) (as replaced — direction to cease entering into contracts including renewals), Section 144(1)(da) (new — directions relating to dividends)
[9] Section 56L(a) (outsourcing standard-making power)
