RBNZ says CBL fiasco isn’t necessarily preventable

RBNZ says CBL fiasco isn’t necessarily preventable | Insurance Business

RBNZ says CBL fiasco isn’t necessarily preventable

The Reserve Bank of New Zealand (RBNZ) said it can’t promise that there won’t be a repeat of the CBL Insurance fiasco, which involved the firm staying mum despite being considered as insolvent, BusinessDesk reports.

Geoff Bascand, deputy governor at RBNZ, said in the New Zealand Shareholders’ Association (NZSA) annual conference that they still strongly support transparency – but with limits.

He added that the regulator learned a lot from the independent review of the way they handled CBL’s collapse, including acting more decisively and earlier.

“The review endorsed our approach to confidentiality but said, if we’re going to act confidentially, we’ve got to act quicker,” Bascand said, as reported by BusinessDesk.

Read more: Insurers to face increased scrutiny from regulator

Bascand pointed out that that another problem they encountered was that CBL’s management disagreed with their views on how much reserving it should have.

When an NZSA member asked what the regulator had changed “so we don’t buy any shared in companies that are already bankrupt,” Bascand mentioned that the first change was “a cultural one.”

“We’re going to be more sceptical and expect more evidence of what companies are giving us and looking for proof and being more willing to act,” Bascand explained further.

In regards to concerns about the likelihood of another CBL situation, Bascand explained: “That is the difficult issue here. We can’t do everything on your behalf. We can do the best we can do, but it’s up to companies to report on their viability.

“When a company thinks it’s better than it is, that’s a very difficult circumstance. There are lots of issues involved that they believed, I would say wrongly, their own accounting information and their own estimates on claims.”