The Reserve Bank of New Zealand (RBNZ) has announced that cabinet has agreed to advance amendments to the Insurance (Prudential Supervision) Act (IPSA), signalling a new phase in the ongoing review of the country’s insurance regulatory regime.
The proposed legislative changes are set to affect licensing, oversight, and capital requirements for insurers operating in the New Zealand market.
Under the planned amendments, all insurers incorporated in New Zealand would be required to hold a licence.
The reforms would also introduce a licensing regime for non-operating holding companies of insurers based in New Zealand, enabling the RBNZ to supervise insurance groups as a whole.
In contrast, certain overseas reinsurers and captive insurers – entities formed by parent companies to insure their own risks – may see licensing requirements removed if they operate solely as reinsurers.
The proposals also include the introduction of a default solvency margin in IPSA, which would set a baseline for the amount of capital insurers must hold above minimum requirements.
Additionally, the RBNZ would be granted new authority to restrict dividend payments by licensed insurers if necessary.
The review of IPSA began in 2016, with initial work completed the following year. Progress was delayed by the COVID-19 pandemic and a shift in focus to other legislative reviews. The RBNZ’s final consultation on the matter concluded in late 2023.
In August 2025, the cabinet endorsed a set of recommendations to move forward with an amendment bill, and an exposure draft is expected to be released for public feedback in early 2026.
IPSA currently provides the framework for the RBNZ’s prudential regulation of insurers, while the Financial Markets Authority (FMA) oversees conduct regulation.
According to the Insurance Council of New Zealand (ICNZ), prudential regulation is designed to ensure insurers are able to meet their claims obligations.
The act’s stated objectives include maintaining a sound and efficient insurance sector and supporting public confidence.
A distinctive feature of New Zealand’s regulatory environment is the high catastrophe risk capital requirement.
ICNZ notes that while many global insurers must be prepared for a 1-in-200 or 1-in-250 year catastrophe, New Zealand insurers are required to hold capital or reinsurance for a 1-in-1,000 year event.
This requirement, according to ICNZ, limits the ability of domestic insurers to deploy capital elsewhere, which may influence investment returns and premium pricing.
The review concluded that New Zealand’s insurance regulatory framework requires updates to better align with international standards and support market stability.
Finance Minister Nicola Willis outlined the objectives of the proposed amendments, which include:
“The proposals are intended to also align the insurance regulatory framework more closely with the regulatory framework for deposit takers and with international best practice,” Willis said, as reported by Interest.co.nz.
She added that the changes are designed to “support insurance regulation promoting the right balance between a sound and efficient insurance sector.”
Separately, the government has unveiled changes to climate reporting and capital markets rules.
The threshold for mandatory climate-related disclosures for listed companies will rise from $60 million to $1 billion in market capitalisation.
Managed investment schemes will be excluded from the climate reporting regime, reducing the number of entities required to report.
From March 2027, fund managers – including those managing KiwiSaver schemes – will be required to disclose the location and asset class of their holdings.
This information will be published on the Companies Office’s Disclose Register, providing investors with greater transparency.
