Nine health and life insurers are set to exit New Zealand’s mandatory climate-related disclosures regime, removing between $10 million and $15 million in annual compliance costs from a sector the government says was never a suitable fit for the reporting framework. Commerce and Consumer Affairs Minister Cameron Brewer confirmed on June 18 that Cabinet has agreed to draft an amendment paper to the Financial Markets Conduct Amendment Bill to formally remove health and life insurers from the climate-related disclosures (CRD) regime. The Financial Markets Authority (FMA) followed on June 18 with immediate interim relief, confirming it will not take action against affected entities that do not lodge climate statements while the legislation is pending. The decision brings the total number of entities facing mandatory climate reporting obligations down to approximately 67, from an original 164.
Financial Services Council (FSC) chief executive Kirk Hope said the obligations had placed costs on the sector without producing measurable benefit for customers, citing the structural difference between what health and life insurers underwrite versus what the CRD regime was designed to address. “Health and life insurers do not insure homes, farms, or roads against floods and storms. They protect people when they get sick, can’t work or when their family needs support. The previous regulations treated very different risks as if they were the same. That added compliance cost of $10 million to $15 million a year without clear value for New Zealanders,” Hope said. He added that the removal from mandatory reporting does not mean the sector will cease managing climate considerations. “Climate risk still matters and insurers will keep managing it through governance and prudential oversight. But mandatory investor-style climate reporting was not the right tool for health and life insurance customers,” he said.
General insurers carry direct exposure to physical climate risks – property damage from floods, storms, and other weather events – whereas health and life insurers cover illness, disability, and death-related claims. That distinction sits at the centre of the government’s case for removing health and life insurers from the regime. “Unlike general insurers, health and life insurers aren’t directly exposed to climate risks like extreme weather events, so there’s little value in making them report on it. They’ve told us they don’t belong in the climate reporting regime, as ultimately it adds cost to their clients,” Brewer said. He also pointed to concerns about the original regime’s design, including feedback that it had functioned as a disincentive for companies considering an NZX listing, and that compliance costs for some entities were disproportionate to any demonstrable benefit.
Once all amendments are enacted, the CRD regime will apply to listed issuers with market capitalisation above $1 billion, and to registered banks, credit unions, building societies, and general insurers holding assets of more than $1 billion. General insurers with revenue exceeding $250 million will also remain in scope regardless of asset size. Earlier adjustments to the regime – raising the listed issuer threshold and removing managed investment schemes – are already incorporated into the Financial Markets Conduct Amendment Bill, which is at second reading stage. The health and life insurer removal will be added to the same bill via the amendment paper now being drafted. Brewer said the intent of the cumulative changes was to ensure the right businesses are reporting. “Our largest businesses, the ones with the greatest impact and the resources to comply properly, will still report. This is about cutting costs where they don’t make sense, not lowering the bar for those who should be at the table,” he said.
Because the legislative timeline for the amendment bill remains uncertain, the FMA confirmed it would take a no-action position on health and life insurers that do not lodge climate statements for the current reporting period. The relief applies to insurers with balance dates of March 31, 2026, and onwards, covering lodgement obligations for the 2025/2026 reporting period. No application or notification to the FMA is required to rely on the relief.
FMA general counsel Liam Mason said the regulator’s position was intended to align with the direction of the proposed legislative change while avoiding additional costs during the transition period. “We recognise that many life and health insurers will be impacted by the uncertain timeframe in which the amending legislation might be passed. This will mean that they do not know whether they will be required to lodge climate statements. This approach will avoid unnecessary compliance costs and promote the development of fair, efficient, and transparent financial markets,” Mason said. He confirmed that if the legislation has not passed before health and life insurers are due to begin preparing statements for the 2026/2027 reporting period, the FMA would reassess the no-action position. Any voluntary climate reporting undertaken after the legislative changes take effect will remain subject to the fair dealing provisions in Part 2 of the Financial Markets Conduct Act.
For general insurers that remain subject to mandatory reporting obligations, the FMA’s 2026 Climate-related Disclosures Insights Report – published May 26 – signals where regulatory attention is heading. The report reviewed 62 climate statements from the second year of mandatory reporting and identified physical risk disclosure as the area most in need of development. The FMA found that while entities had made progress on governance disclosure, greenhouse gas emission reporting, and risk management articulation, many had not adequately explained how specific climate hazards translate into risks for their assets, operations, or customer base.
The regulator noted that climate change is already producing measurable effects in New Zealand through more frequent and severe weather events, with potential financial consequences flowing through to assets, operations, supply chains, and insurance availability. General insurers still within scope should expect closer FMA scrutiny of physical risk methodology in upcoming reporting cycles. The regulator said its monitoring approach would remain educative, with increased focus on physical risk guidance – a signal that how general insurers assess and disclose climate exposure is likely to draw more attention as the regime matures.
