Guy Nathan: Insurance (Prudential Supervision) Bill — In Committee Third Reading 
Guy Nathan: Insurance (Prudential Supervision) Bill — In Committee Third Reading 
[Volume:666;Page:13599] 
Hon NATHAN GUY (Minister of Internal Affairs) 
: 
 I move  
That the Insurance (Prudential Supervision) Bill be now read a third time 
. I wish to thank all of those who have contributed to the smooth process of this sensible and well-targeted bill through its parliamentary process. Although this morning we heard a lot of political point-scoring during the debate of the Committee of the whole House generally speaking this bill has very much cross-party support. The collaborative approach taken firstly by the industry and the stakeholders in their active engagement with officials through the developmental phase of the bill and subsequently between the industry officials and also the Finance and Expenditure Committee through the select committee process has meant that overall everyone has made a very valid contribution to the appropriate and effective outcomes that this bill will achieve. 
The purposes of the bill are to promote the maintenance of a sound and efficient insurance sector and to promote public confidence in the overall sector. The bill takes a number of steps to achieve these purposes. It establishes a framework for the prudential regulation of insurers and it requires insurers to be licensed and subject to prudential requirements. It makes the Reserve Bank responsible for supervising insurer compliance with the bill and it provides certain powers to the Reserve Bank to act in respect of insurers in financial distress. By taking these steps the bill will bring New Zealand into general alignment with established international insurance regulatory practice. 
The bill recognises the diversity and the comparatively small New Zealand insurance market and it seeks to maintain the balance of the market through regulation and making sure that that regulation is appropriate in the New Zealand context. We do not want to impose excessive or unnecessary compliance costs on the industry and overall we need to deliver an appropriate level of regulatory effectiveness. Once the transitional implementation phase is completed compliance costs will be comparatively light for compliant insurers. The financial reporting requirements contained in the bill the emphasis on governance and senior management accountability and on involvement in the process and the outsourced viewpoint of insurers’ financial strengths from independent rating agencies all contribute to a cost-efficient yet effective mode of delivery of this new regulatory model for New Zealand insurers. 
The enactment of this legislation will see the repeal of a number of existing outdated and poorly linked pieces of insurance legislation that date back in some cases to 1908. It will remove inconsistent legislative application between the different insurance sectors. In summary it will deliver to New Zealand a current relevant and international-standard model of insurance prudential regulation. As I mentioned during the Committee stage the first reading of the bill in December 2009 had wide-ranging cross-party support and general support from those within the industry. This demonstrates that across the political spectrum and within the industry there is a clear recognition of the purpose of this bill. The means by which it will achieve those purposes are appropriate to the New Zealand market that it will regulate. I commend the bill to the House.