The Reserve Bank – Te Pūtea Matua – has published its feedback to responses received on the draft interim solvency standard for insurers, which determines the minimum amounts of capital that insurers must hold.
The interim standard is needed in order to take account of upcoming changes to the accounting rules (IFRS 17) and to incorporate feedback on our current solvency standards. It has been designed so that policyholders can be comfortable that an insurance company has enough funds to meet its promises to policyholders, even in stressed circumstances, Deputy Governor and General Manager of Financial Stability Christian Hawkesby says.
“The interim solvency standard is part of a multi-year review of solvency requirements under the Insurance (Prudential Supervision) Act 2010,” Mr Hawkesby says.
“We received a large number of written submissions in response to the exposure draft from insurers, industry organisations and other interested parties. As well as the written submissions, we received a lot of verbal feedback through bilateral meetings and webinars. These comments were greatly appreciated and have helped to refine the interim standard.”
The interim standard was intended to be in-force from 1 January 2022. However, industry feedback advised that this was not necessary. We agreed with this assessment and the interim standard will come into force on balance dates after 1 January 2023 and be in-force for around three years. Its contents have been informed by our supervision of the insurance industry and consultation with industry representatives and the general public.
The interim standard will now go through further consultation with industry bodies, and external legal and actuarial review, before being finalised in the third quarter of this year. We expect the final solvency standard to be in force from 2025.