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Tuesday, October 25, 2011

New solvency requirements for insurance companies

The Reserve Bank of New Zealand (RBNZ) has issued new solvency requirements for non-life insurance companies. The purpose of the change is:
  • to protect the government and taxpayers from having to financially support an insurance company as has happened with AMI
  • to protect policy holders by requiring insurance companies to have adequate reserves and reinsurance cover
 The requirement is that insurance companies must be able to demonstrate they have sufficient reserves and reinsurance to cover the costs of a 1-in-a-1000 year event.

A copy of the policy, which is quite detailed in parts, is available from the RBNZ here and the policy position paper here.

The views of the New Zealand insurance industry are reported by insuranceNEWS.com.au here.
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