The Reserve Bank of New Zealand (RBNZ) says insurers are falling “well short” of minimum requirements for financial strength rating and solvency disclosures.

A thematic review found 53% of participants have low or poor-level compliance, while 22% perform relatively well.

“The level of compliance was generally disappointing and needs to markedly improve,” it says.

The worst-performing insurers have been asked to provide written responses on identified issues, while others have been informed of their assessment and urged to identify improvements.

“The RBNZ will undertake further assessment of compliance with disclosure obligations to ensure that standards improve and compliance obligations are being met,” it says.

The most common issues were around not disclosing financial strength ratings in writing before policyholders enter into or renew a policy, solvency disclosures in financial statements being incomplete or incorrect, and website disclosures being incorrect, incomplete or not updated within the required timeframe.

Small insurers are among the segments performing poorly on disclosure, possibly due to lack of resources or focus, according to the review.

Overseas insurers, which may lack knowledge of New Zealand requirements, are also falling short of their obligations, along with insurers with more complexity.

RBNZ gathered information from 36 insurers, chosen from a mix of sizes and types.

Participants included life, non-life, health and small insurers, bancassurers, overseas insurers and member associations.