NZ regulator proposes approval measure for 'relevant' officers appointment

The Reserve Bank of New Zealand (RBNZ) has proposed requiring insurers to seek its approval for appointments of “relevant” officers, including CEO, director and CFO, in a consultation paper focused on improving the Insurance Prudential Supervision Act 2010 (IPSA).

IPSA already requires insurers to certify that relevant officers are “fit and proper” for their roles and to re-issue certification every three years.

“We propose amending IPSA to require insurers to ask for our approval before they appoint relevant officers and to notify us whenever they receive information that casts doubt on fit and proper assessments,” the consultation paper says.

“We also propose extending fit and proper requirements to all senior management.”

RBNZ also wants the proposed change to apply to appointed actuaries, given the “special role” they hold in making sure that the insurer’s board has a good understanding of the insurer’s financial position and the risks it is exposed to.

“The appointed actuary’s primary responsibility is to the insurer but some of the information and judgments they make are also important to the Reserve Bank and broader market actors, who rely on those judgments when they assess an insurer’s financial soundness,” the consultation paper says.

RBNZ is also seeking feedback on whether IPSA should empower a “standard” that would set out the appointed actuary’s role and responsibilities more clearly.

It is also looking into whether appointed actuaries should also be subject to a legal duty of due diligence, reflecting the need for “outsiders” to rely on their judgment.

The consultation paper also contained proposals in relation to governance and risk management, supervisory processes and data and disclosure.

“The proposed changes will help to underpin the more proactive and intensive approach to supervision that we have been developing in recent years across the sectors we regulate,” Deputy Governor and GM for Financial Stability Christian Hawkesby said.

“We are proposing to introduce a series of standards that will set out our expectations for insurers’ governance arrangements and risk management practices in a way that is clearer, more detailed and more enforceable.”

RBNZ says the consultation is the last of four topic-specific consultations as part of its review of IPSA.

Closing date for submissions is February 21 next year.

Click here for the consultation paper.