The Reserve Bank of New Zealand (RBNZ) will review life insurer solvency requirements alongside a review of the Insurance Prudential Supervision Act, after noticing a fall in solvency buffers.

Some life insurers have low solvency buffers over minimum requirements, and recent falls in long-term interest rates are putting more pressure on their solvency ratios, Deputy Governor Geoff Bascand says.

Affected life insurers are preparing plans to increase their solvency ratios and are being subjected to enhanced supervisory oversight.

This is underscoring the need for life insurers to maintain strong buffers, he says.

“Our recent reviews of banks and life insurers, and the number of recent breaches in key regulatory requirements, reinforces the need for financial institutions to improve their behaviour,” he says.