An International Monetary Fund (IMF) assessment of New Zealand’s financial system has highlighted “significant gaps” in insurance regulation.

The IMF report takes account of the “major overhaul” in regulation in recent years, including establishment of the Financial Markets Authority (FMA), but it makes a number of recommendations for improvement.

It says that for the Reserve Bank of New Zealand, which is the industry’s prudential regulator, “improving supervisory data collection from insurers is a particular need”.

While supervision of licenses’ conduct has been enhanced through broadening the scope of the FMA to include insurance products, “there are significant gaps in the framework for insurance conduct regulation”.

FMA CEO Rob Everett says the assessment reflects work put in over the past decade.

“The IMF has, as expected, put forward some recommendations for further enhancement of the regulatory regime for consideration,” he said. “These recommendations touch on a number of areas including… issues around conduct in the insurance industry.

“The FMA is considering these proposals alongside its fellow regulators.”

The IMF’s Financial System Stability Assessment can be viewed here.