RBNZ seeks feedback on compulsory inspections and insurance enforcement
The Reserve Bank plans to introduce compulsory on-site inspections, penalties and enforcement tools as part of it’s prudential regulation of insurance companies.
Monday, March 14th 2022, 9:35AM
by Dale Owens
The central bank is requesting feedback on the possibility of introducing compulsory on-site inspection powers at insurers premises, including where necessary without prior notice.
The consultation is the third of five and will form part of the RBNZ’s review of the Insurance (Prudential Supervision) Act.
It also discusses introducing a breach-reporting system, where insurers are required to monitor their own regulatory compliance and communicate breaches to The Reserve Bank.
“A well-designed enforcement framework should provide a range of credible responses to compliance problems so we can respond in a way that is proportional to the issue we’re addressing,” deputy governor Christian Hawkesby said.
The RBNZ became the prudential regulator of insurance companies when the act was passed in 2011, but that law only currently allows it to physically inspect an insurance company with that company's consent.
To ensure insurance is not being provided inappropriately, information will also be able to be demanded from businesses that aren't licensed insurers.
Approval for the prudential regulator to have the power of compulsory inspections of banks has already been green-lighted by cabinet; this will be included in the proposed Deposit Takers Act.
That bill is likely to be introduced into parliament soon after the first draft consultations closed last month.
The Reserve Bank says it has provided a long consultation period as part of its review of the act and it is mindful of the range of industry consultations currently underway. Feedback is encouraged and a webinar for interested parties will be held on 22 March. Submissions are due by 20 May 2022.
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