Impending regulatory reforms for the NZ insurance industry will protect reputations but also raise compliance costs, says Insurance Council of New Zealand (ICNZ) CEO Chris Ryan.

Speaking last week at an Australia and NZ Institute of Insurance and Finance breakfast in Auckland, he said individuals within smaller companies "will find compliance costs very high".

The legislation seeks to register all financial services providers, set minimum qualifications for all financial advisers, specify prudential supervision and control market conduct and contracts.

Warning of the "huge implications" for insurance companies contained in changes to disclosure requirements and remedies, Mr Ryan said the legislation is aimed more at the wider financial services sector "without adequate recognition being provided to the insurance segment". A similar charge was levelled against Australia's Financial Services Reform Act in 2001.

Economic Development Minister Lianne Dalziel told the breakfast the reforms will set standards which "allow NZ to better meet international regulatory standards as well as providing a solid basis for trans-Tasman mutual recognition of financial advisers".

A new Insurance Contracts Bill, to be introduced later this year, will "switch the onus from the insured to the insurer to essentially ask all the right questions," Ms Dalziel said.

"This will avoid instances where the insured innocently fails to tell their insurer something that might affect the assessment of risk."

The bill will also require insurers to be responsible for the actions of their agents and require the status of the intermediary to be declared in writing. "The default position will be that the broker is an agent of the insurer."