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A spit shine for the Insurance (Prudential Supervision) Act

02 October 2013

Insurers will have four months to file their interim financial statements under an amendment last week to the Insurance (Prudential Supervision) Act 2010 (IPSA).

This is shorter than the five months currently allowed but longer than the three months which was initially proposed and would have aligned IPSA with the Financial Reporting Bill, now awaiting its third reading.  We expect that this Bill will be similarly amended during the committee stages in the House.

Year-end financial statements will continue to have a reporting time limit of five months, at least until the Financial Reporting Bill comes into force.

Other changes

Most of the other changes, which were recommended by the Reserve Bank to iron out wrinkles identified in the transitional phases of the Act’s implementation, will apply only in highly specific circumstances.  They include:

  • exempting from the need to have a current financial strength rating insurers who are winding down and are not entering into any new insurance contracts
  • relieving an insurer from the requirement to disclose its financial strength rating on a policy renewal, so long as the rating was disclosed to the customer the year before and has not changed in the interim
  • excusing an insurer from preparing and providing interim financial statements to the Reserve Bank where those statements are prepared for the insurer and its subsidiaries as a group
  • extending to five years the limitation period in respect of an offence under ISPA
  • providing further guidelines for a publicly accessible register of licensed insurers to be maintained by the Reserve Bank 
  • allowing the Reserve Bank to impose licence conditions which require certificates relating to compliance with the Act and other requirements, not just with the conditions themselves
  • allowing the Reserve Bank to specify alternative criteria to generally accepted accounting practice (GAAP) to insurers who are preparing interim financial statements (for example, legal requirements that apply in the insurer’s home jurisdiction), and
  • allowing provisional licences to continue if the insurer is affected by insolvency proceedings, a full licence has been declined, or the Reserve Bank has issued a direction that the insurer ceases new insurance business. 

For further information, please contact the lawyers featured. 

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