The Reserve Bank of New Zealand (RBNZ) will ensure that insurers are on the path to obtaining a full licence by September 2013 and that by next March they meet the provisional licensing requirements under its new regulatory regime.

The bank’s annual report says the regulator has had to gear up its regulatory capacity this year so it can develop and implement new regulatory systems for insurers and non-bank deposit-takers (NBDTs).

Noting the pressure that general insurers have faced as a result of the Christchurch earthquakes, the bank says such events “highlight the importance of adopting standards that maintain confidence in the insurance industry in the face of major shocks”.

While it expects the new standards for insurers and non-bank deposit-takers to improve outcomes, the bank says most financial activities are based on calculated risks.

“If standards were so strict that failure could be ruled out, this would almost certainly mean that the standards were overly stringent, preventing the financial sector from playing its full role in intermediating financial transactions and risk.

“Thus, despite the Reserve Bank’s involvement with banks, NBDTs and insurance companies, individual agents and their advisers must still be responsible for taking appropriate precautions when dealing with any financial institution.”