Brownlee Gerry: Insurance (Prudential Supervision) Amendment Bill Reserve Bank of New Zealand Amendment Bill — Third ReadingsText is incorporated into the Bound VolumeBrownlee Gerry: Insurance (Prudential Supervision) Amendment Bill Reserve Bank of New Zealand Amendment Bill — Third Readings[Sitting date: 27 August 2013. Volume:693;Page:12811. Text is incorporated into the Bound Volume.]Hon GERRY BROWNLEE (Leader of the House) on behalf of theMinister of Finance: I moveThat the Insurance (Prudential Supervision) Amendment Bill and the Reserve Bank of New Zealand Amendment Bill be now read a third time. This is legislation that essentially looks at the prudential arrangements for insurers in New Zealand. The Insurance (Prudential Supervision) Act of 2010 established a licensing and prudential supervision regime for insurers carrying on insurance business in New Zealand. It replaced existing outdated and disjointed insurance legislation and aligned New Zealand with international regulatory benchmarks and expectations. This bill represents a significant step forward in terms of delivering comprehensive prudential regulation of insurers carrying on that business in New Zealand. Although the 2010 Acthas proven to be generally effective and robust it is not unexpected that some of the provisions that have been identified as appropriate for reform are considered in this bill.The Insurance (Prudential Supervision) Amendment Bill and Reserve Bank of New Zealand Amendment Bill contain a small number of amendments to the 2010 Act and one consequential amendment to the Reserve Bank of New Zealand Act 1989. The amendments were identified by the Reserve Bank when reviewing the operation of the Act during the transition period towards full licensing which expires at the end of September 2013. That is a short time away and one of the reasons why we need to get the bills through for Royal assent as quickly as possible. The bills aim to reduce or eliminate unnecessary compliance costs and address technical issues identified during the provisional licensing to ensure a smooth transition to full licensing of insurers. This review has been a useful post-implementation exercise and the Reserve Bank aims to complete a wider policy review in 5 years. The bills allow for a provisional licence to remain in force at the discretion of the Reserve Bank if particular circumstances apply to an insurer. The provisional licence may remain in force until the Reserve Bank is satisfied that it should be cancelled.The bills also allow for overseas insurers to be permitted on application to and approval by the Reserve Bank to provide half-yearly financial reporting based on the home country regulatory reporting requirements. These are important matters as New Zealand I am sure would benefit from more insurers in our local market to augment the large players that currently have such big chunks of our market.Two other proposals are expected to reduce or eliminate unnecessary compliance costs. The first of these allows the Reserve Bank to accept an insurer that is running off its liabilities from the requirement to have a current financial strength rating. I think you would find that Southern Response in Canterbury fits into that category. The second clarifies that in respect of contracts of insurance that renew more frequently than annually disclosure in writing on the insurer’s financial strength rating to the policy holder may be made on at least an annual basis rather than at every renewal.The amendment bill also takes the opportunity to address technical issues—for example providing a limitation period of 5 years within which the Reserve Bank may file a charging document against an insurer that has committed an offence to ensure consistency across both bills. The amendment bill also empowers the Reserve Bank to publish and maintain on its website an official register of licensed insurers with additional content to be determined by regulators. This will result in consequential amendments to the Reserve Bank of New Zealand Act 1989. I commend the bills for their third readings.