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Local incorporation out of insurance bill

Some parts of the industry were "a little disappointed" that local incorporation for insurance companies would not become mandatory under draft legislation released yesterday, according to Vance Arkinstall, head of the Insurance Savings and Investment Association (ISI).

Tuesday, April 21st 2009, 8:45PM

by David Chaplin

Arkinstall said the draft version of the Insurance (Prudential Supervision) Bill has stuck with earlier proposals to allow insurance companies to retain branches in New Zealand without incorporating in this jurisdiction.

"ISI members are divided on the issue... some would have preferred local incorporation for all insurers," he said.

Currently, three ISI life insurance company members are incorporated offshore - AXA and AMP in Australia while AIG is a Bermuda-based firm.

"The Reserve Bank [which will police the new legislation] has indicated it is happy that the controls in these countries are adequate," Arkinstall said.

Interested parties have until June 22 to comment on the draft legislation, however, the Reserve Bank is seeking feedback on "legal, drafting and operational" issues rather than policy settings.

In a release yesterday the Reserve Bank said it was seeking feedback in particular on: the correct definition of "insurance concepts" such as 'life insurance' and 'continuous disability policy'; the workability of statutory fund provisions, and; the treatment of 'composite policies'.

Arkinstall said while the ISI has yet to analyse the detail, the insurance bill appeared "consistent with earlier discussion papers and Reserve Bank briefings".

He said the ISI had also made some progress in discussions with government officials about the proposed tax changes of life insurance products.

"The signs are good that officials and the FEC [Finance and Expenditure Committee] are listening to the industry," Arkinstall said. "However, we've yet to hear when the [new tax rules] will start."

The ISI has been lobbying for a January 2011 start date for the insurance tax legislation, however, it is understood the government intends the law to take affect in July 2010.

 

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