The New Zealand insurance industry is concerned that the Reserve Bank and Treasury have damaged the industry by raising fears that another insurer is at risk of failure.

The Insurance Council of New Zealand (ICNZ) has asked the central bank to name the company but the bank has refused.

“It tarnishes the whole industry,” ICNZ CEO Chris Ryan told insuranceNEWS.com.au. He says it’s “not helpful” to raise concerns without identifying the company, even though the advice was later qualified.

Most people in the industry speculate it is an insurer that will get an injection of funds from a foreign parent and is at no risk of collapse.

The information was contained in documents relating to the rescue of AMI Insurance and the failure of Western Pacific Insurance following the Christchurch earthquake. They outline advice given by the Treasury and Reserve Bank to the Government, which bailed out AMI but refused to assist Western Pacific.

A document on March 17 refers to a third insurer being “at high risk of failure”, but the name is blanked out.

On March 10, ministers were told no other insurer was likely to be as vulnerable as AMI, which received a $NZ500 million ($373 million) rescue package from the Government following the earthquake.

Insurance Brokers Association of New Zealand CEO Gary Young says the concern about the third insurer “is not helpful in the current environment” and has fuelled speculation about which company is mentioned.