New legislation controlling the activities of insurers in New Zealand may be delayed by the impending election.

Insurance Council of NZ CEO Chris Ryan told insuranceNEWS.com.au last week the council is currently consulting with members before drafting a formal response to new Reserve Bank proposals on regulations.

But he says the election – due before November 15 – may get in the way of implementation.

“I don’t think we’ll see anything before the election,” Mr Ryan said. “So any new legislation is likely to be delayed.”

At present NZ insurers operate under few regulations, but in June last year the Reserve Bank was named insurance industry regulator in line with Government aims to lift regulatory standards.

Last November Finance Minister Michael Cullen called for a “relatively light-handed approach to supervision and regulation of the insurance sector”.

The Reserve Bank now proposes it should have the power to liquidate companies for breaching compliance, and suggests foreign insurers be subject to ratings based on financial strength.

It proposes limits on the amount of “non-insurance activities” carried out by insurers, capped at 2.5% of total revenue. It also wants the right to approve all corporate transactions that materially affect an insurer’s obligations to policyholders.

Life insurers will be compelled to operate through a statutory fund.

A final report will be submitted to the Government by July 31.