The Reserve Bank of New Zealand is considering 42 submissions on its review of the Insurance Prudential Supervision Act 2010 and will provide an update on its next step “in due course”.

An issues paper earlier this year said further consultation on options would take place after the central bank considered submissions, with legislative changes to happen next year at the earliest.

The Insurance Council of New Zealand is continuing to push for future reviews to be conducted by a different organisation, and says the issues paper should have sought views on merit review or strengthened appeal rights for Reserve Bank decisions.

“Most legislative or regulatory reviews are not conducted by the regulator responsible for applying that legislation and regulation,” its submission says.

It also calls for the bank to have a greater role in monitoring disruptive changes to the sector, and raises concerns about differences in regulation of overseas insurers, including exempting them from the requirement to hold sufficient reinsurance cover for a one-in-1000-year catastrophe.

“Regulation in New Zealand should, wherever possible, be competitively neutral between domestic and overseas insurers and should protect the New Zealand policyholder as a priority,” it says.

Submissions take a mixed view on the suggestion that a “statutory fund framework” could apply to overseas insurers, to help protect the interests of New Zealand policyholders.

Chubb says it would help New Zealand policyholders in the case of an insolvency, while the other option is to “at least require overseas branches to meet the same local asset and insolvency requirements as locally incorporated insurers”.

Allianz says it holds reinsurance for its New Zealand operations well in excess of the one-in-1000-year requirement, and current arrangements are adequate without needing to set up statutory funds.

“Competition in the market is good for New Zealand policyholders and also spreads the risk among a higher number of insurers,” it says.

“Any over-regulation or unnecessarily heavy-handed approach may lead to the inevitable conclusion that doing business in New Zealand is simply no longer viable.”