As a prudential regulator the Reserve Bank has responsibility to ensure that all regulated entities (banks and insurers) follow the proper rules and regulations to ensure that New Zealand’s financial system is resilient.
This warning is a reminder for all insurers of the importance of continuously managing their compliance obligations under IPSA through effective risk management and sound governance practices.
Quest’s non-compliance included prolonged failures to maintain its minimum non-life solvency margin, and to maintain a statutory fund for its life insurance business.
“Prudential requirements such as good governance exist to protect policy holders and to promote the maintenance of a sound and efficient insurance sector.” Deputy Governor and General Manager of Financial Stability Christian Hawkesby says.
Quest has acknowledged and remedied the breaches of its obligations and is in the process of implementing further risk management measures to prevent similar issues in future. These breaches did not impact on Quest’s ability to pay out on claims to policy holders.
“The findings from this investigation demonstrate the importance of effective risk management and the need for sound governance to ensure the New Zealand public has trust and confidence in the insurance sector.” Mr Hawkesby says.
The Reserve Bank applied its Enforcement Framework and Warning Policy in its decision to issue the warning to Quest.
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