The Reserve Bank of New Zealand (RBNZ) has released its interim solvency standard for insurance, which comes after two years of planning and consultation with the industry and other interested parties.

The interim standard will come into effect on Jan. 1 and will be applied to individual non-exempt insurers at various times in 2023 by changes to their condition of licence. The RBNZ has advised insurers to begin using this standard in their projections.

RBNZ started a review of the existing insurance solvency standards in mid-2020, partly to address IFRS 17, the new accounting standard for insurance contracts. The solvency standards are being reviewed alongside the Insurance (Prudential Supervision) Act 2010 (IPSA), which is the primary legislation that empowers regulation and supervision over the industry.

“Solvency standards are a key piece of secondary legislation empowered by IPSA,” said RBNZ deputy governor Christian Hawkesby. “I want to express my thanks to all those who took the time to submit their views during our consultations. This process has helped to ensure that the interim standard will streamline solvency calculations and be fit-for-purpose.”

A final solvency standard will be consulted on in a second stage of the review of the solvency standards, the regulator said.