tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Tuesday, March 19th, 10:57AM

Insurance

rss
Latest Headlines

Tougher controls planned for insurers

Insurers face more rigorous ratings and financial reporting requirements under law changes proposed by the Ministry of Economic Development.

Thursday, January 3rd 2002, 5:25AM

Suggested changes to the Insurance Companies (Ratings and Inspections) Act would require almost all non-life insurers to get, and make public, independent ratings of their financial strength.

Insurers would have to explain the meaning of the rating to the public. Also responsibility for selecting ratings agencies would move from the Insurance Council to the Registrar of Companies.

The act would also be extended to cover insurers incorporated in New Zealand, but carrying on insurance business elsewhere.

Under the proposals all insurers, except life insurers and captive insurers, would require a rating that reflects their financial strength, rather than just their claims paying ability.

Currently, there are about 33 unrated insurers offering health, liability, income, mortgage and consumer credit insurance. Included in this group are some that are vulnerable to insolvency, creating a real risk for policyholders, the ministry says.

Extending the Ratings Act to insurers incorporated in New Zealand but operating outside the country would discourage overseas operators from using this country’s liberal regulatory regime to avoid stricter rules in their own country, the ministry says.

Insurers would have to make publicly available the entire ratings report, rather than just the rating.

Bonds unshackled

Changes are also proposed for the Insurance Companies’ Deposits Act. Insurers would be required to file standardised accounts, but would no longer have to make security deposits of up to $500,000 with the Public Trust.

The ministry says the act, passed 50 years ago, no longer fulfills its original purpose of providing a pool of funds for policyholders should an insurer go bust. The act’s financial reporting requirements are also outdated and inadequate.

About 139 deposits are held under the act, totally about $56 million.

However, the ministry says the amounts held are too small to realistically cover policyholder losses during an insolvency. The are also too small to prevent unreliable or undercapitalised insurers setting up in business.

It suggests returning the money to insurers, and says they should instead be required to file financial statements that comply with relevant accounting standards – usually Financial Reporting Standard 35. Insurers' accounts would then be prepared in a standardised way, helping comparisons between different insurers.

« 2001 competitive year for insurersUnderwriting about making good judgement calls »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
Insurance Briefs

AIA adds cover for prophylactic surgery following cancer
AIA makes changes to policies and adds preventative surgery for several types of cancer.

Chubb appoints David Morrow as Country President for New Zealand
Chubb has appointed David Morrow as Country President for New Zealand.

nib adds specialist skills to its board
Two new board appointments at health insurer nib add new perspectives, chairman says.

nib gets new CFO
Alvin Soh has joined nib New Zealand as its chief financial officer. Heh is a chartered accountant with more than 20 years of commercial experience in leadership roles.

News Bites
Latest Comments
Subscribe Now

Cover Notes - Specific news aimed at risk advisers

Previous News
Most Commented On
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com
x