Reserve Bank of New Zealand Insurance Industry Update July 2022

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UNCLASSIFIED Ngā Karere Inehua Insurance Industry Update 19 July 2022 Tena koutou katoa, I’m pleased to share the second instalment of our Ngā Karere Inehua – Insurance Industry Update. It’s been a few months since our first update and there have been some important milestones and exciting changes since the May newsletter. The Insurance Industry Update was created to include you in our efforts to embrace Kotahitanga (which loosely translates to ‘unity’ and ‘connection’). This update provides a brief summary of all the key projects, initiatives and changes within RBNZ. It is one element of our commitment to open, frequent and relevant communication with you. The biggest milestone for us has been implementing Te Aka Matua – the RBNZ Act 2021, our core legislation that has come into effect replacing our previous 30-year old Act. We also welcomed our new Governance Board. We are proud to have a group of such highly experienced, diverse and talented directors. They have a big task ahead of them – stepping into a critical institution that is in full flight. I know our work will provide significant opportunity for the Board to shine and succeed – guiding and supporting us in our mahi. This update covers a number topics, including new appointments within the

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UNCLASSIFIED Financial Stability Group, the Insurance Prudential Supervision Act (IPSA) and Solvency standards policy decisions, our new website, and a summary of our recent Directors and Senior Officers Workshops. It was fantastic to see you all in person, and online, during those workshops. I was also recently in London, where alongside the Financial Markets Authority (FMA), we co-hosted a recruitment event. Currently, New Zealand is facing a tight labour market in the specialist skills we need. The campaign aimed to attract new employees both in the local market and develop interest internationally, including from New Zealand expats based offshore. The event itself was a success. It turned out to be oversubscribed with people considering a career in New Zealand, and those interested to hear about New Zealand’s changing regulatory landscape. While in London, I took the time to do a number of other things. I spoke with global asset managers and hedge funds that participate in New Zealand markets, to get feedback and broader perspectives on global central banks. Along with Samantha Barrass (CEO, FMA) and team, we spent two days in meetings with the Bank of England, and one day at the Financial Conduct Authority (the FMA equivalent). These opportunities are important as we look to share and learn from our experiences as central banks and financial regulators. If you find these updates valuable, or have any other suggestions on how you’d like to engage with us, we’d like to hear from you. Please contact your RBNZ business partner or send an email to rbnz-info@rbnz.govt.nz. Tēnā koutou katoa, Kia kaha Kia māia Kia manawanui

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UNCLASSIFIED Kia ora koutou katoa! Christian Hawkesby Deputy Governor/General Manager Financial Stability Banks/Insurers Directors and Senior Officers As part of our ongoing efforts to extend and deepen our engagement with the insurance industry we held our inaugural insurance Directors and Senior Officers Workshops in June. We were very pleased to host everyone in person in Auckland on 23 June, followed up with an online event on 29 June. The agenda covered a broad range of topics, from the Reserve Bank’s transformation programme, our approach to supervision (including thematic reviews and the introduction of insurer stress tests), developments in prudential policy and the results of the Relationship Charter survey. The FMA also attended and provided an update on Financial Services Legislation Amendment Act Transitional licencing, the development of the Conduct of financial institutions (CoFI) regime, and Climate-related disclosures. It was a pleasure to host many of you either in person or online, and we’d be grateful for any feedback on the structure and content of the sessions to help guide us in preparing for future events. Policy development - IPSA and Solvency standards The Insurance Prudential Supervision Act (IPSA) review is making good progress. The original IPSA Act was enacted in September 2010 to bring New Zealand up-to-date with international standards for prudential regulation. We are reviewing the prudential policy settings for the insurance sector as part of our stewardship of the legislation. The review seeks to ensure that IPSA

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UNCLASSIFIED provides for a supervisory regime that is cost effective, risk-based and that promotes the soundness and efficiency of the insurance sector. The most recent consultation on Enforcement and Distress Management took place from 10 March to 20 May 2022. We expect the next consultation, on Governance and Supervisory Processes, to be released in late September. After that, there will be one final policy consultation in 2023, discussing any remaining technical issues and setting out our overall proposals for amending the legislation. Following feedback, we will take revised proposals to Cabinet and begin legislative drafting. Work on the Interim Solvency Standard continues; we have now received all of the inputs we need and are working on addressing any remaining issues and finalising the text. We want to thank those who made contributions. For further information, please keep an eye out on our website. We expect to publish the implementation version of the standard around the end of September. It will be brought into force on 1 January 2023 and be applied to individual insurers when their first annual NZ IFRS 17 reporting period commences sometime in 2023. More Information Policy development - IPSA and Solvency standards To support the growth and leadership capacity of the Reserve Bank’s Financial Stability Group, we made appointments to round out the Group’s Leadership Team. Deputy Governor Christian Hawkesby announced four new appointments in May:  Scott McKinnon, who has been Acting Head of Supervision, steps up into the role of Director of Prudential Supervision;  Angus McGregor is Director of Specialist Supervision and Support;

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UNCLASSIFIED  Kate Le Quesne takes on the role of Director of Prudential Policy; and  Kerry Watt has been appointed as Director of Financial Stability Assessment & Strategy. These newly-appointed directors join Kerry Beaumont, Director of Enforcement and Resolution, to form the Financial Stability Group Leadership Team. These appointments are part of the plans for the expanded and refreshed structure of the Reserve Bank’s Leadership Team. You can find out more about our leadership team on our website.

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UNCLASSIFIED From top left to right: Kate Le Quesne, Angus McGregor, Scott McKinnon and Kerry Beaumont. Update on the CoFR Insurance Forum The Council of Financial Regulators’ (CoFRs’) Insurance Forum continues to meet on a quarterly basis. CoFR is focused on contributing to the efficiency and coordination of insurance sector regulation by providing a space to discuss risks, issues and on-going and up-coming regulatory matters relating to licensed insurers. Some of the issues discussed at the last meeting included the practical challenges around meeting Russian sanction obligations; the impacts of rising inflation and supply chain disruptions; and the challenges associated with the borders reopening. Relationship Charter We were grateful for stakeholders from the insurance industry who contributed to our Relationship Charter online survey in April and May. We are about to publish the full report and the results show a slight improvement on last year – 70% of respondents rated their relationship with us highly compared to 66% of respondents last year. We heard that you appreciate how open and transparent we are and we are working to continue this. We also heard that you wanted to see more consistent communications and more direct contact. We are working on this, through initiatives like these updates, the launch of our new website and continuing to coordinate our forward agenda of regulatory initiatives and policy development. Thank you again for participating in the survey, but please get in touch with us every time you have any feedback to provide, not just when a survey arrives. Our new website

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UNCLASSIFIED In late May, we launched our new website. We've designed it to make it easier to find and understand information for the broad range of people who visit it. The new website is part of our ongoing work to modernise our approach to communication and engagement across a wider range of channels, including digital channels. As stated in our 2021-2024 Statement of Intent, we are committed to being relevant, open, and inclusive. Our new website delivers a digital experience that accommodates the diverse and dynamic needs of our broad audience. It also provides content and data that enables responsive and informed decision-making, empowering people to translate information into knowledge in ways which are meaningful to them. Some of the changes include:  created a powerful search function  improved the navigation  refreshed content into plain language  created interactive graphs  improved accessibility. Changes to Regulation & Supervision information Regulation and Supervision information is now located under “What we do”, alongside our other core functions. You can find key areas of interest from quick links on the home page. You may be interested in viewing the following:  Regulation and supervision  Markets & Payments have been split, into Financial markets and Payments and Settlement systems  Have your say

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UNCLASSIFIED  Oversight of Insurers  Reporting resources for insurers  RBNZ Statement of Intent, Te Waitohu a Te Pūtea Matua 2021-2024 You can check it out now: https://www.rbnz.govt.nz/ For more information, or to provide feedback, please contact web@rbnz.govt.nz. For your information  We regularly consult about regulations that affect banks, insurers, non￾bank deposit takers, and payment systems. Public and industry responses help us make informed decisions and develop effective regulations for a stable and efficient financial system. For more information on our consultations, please click here.  For all information on upcoming Financial Stability Reports, please click here.  For all information on upcoming Monetary Policy Statements, please click here. Copyright © 2022 Reserve Bank of New Zealand, All rights reserved. You are receiving this email because you opted in via our website. Our mailing address is: Reserve Bank of New Zealand 2 The Terrace Wellington, 6140 New Zealand

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