The Reserve Bank of New Zealand (Reserve Bank) opened a 12-week consultation on the long awaited exposure draft of a Bill amending the Insurance (Prudential Supervision) Act 2010 (IPSA), closing 7 July 2026.
The Bill is intended to modernise insurance regulation in New Zealand and bring it closer to international practice. Links to the exposure draft and consultation paper are available here and here.
Who needs to read it? Why?
This update is essential reading for licensed insurers, holding companies of insurers, overseas insurers operating in or doing business with New Zealand, as well as their respective their directors, senior officers, and advisers.
The proposed changes will materially affect how insurers are regulated, supervised, and governed in New Zealand. If you are in the insurance sector – whether as an insurer, reinsurer, or adviser – these reforms will affect your business.
What does it cover?
The exposure draft is the latest step in what has been an extended process so far. That has involved various releases and consultations, with the Governor of the Reserve Bank announcing key policy decisions by Cabinet, in September 2025. Some of the key policy issues are summarised in our earlier newsletter here.
The Reserve Bank is now seeking technical feedback on the draft Bill to help ensure the changes work in practice, deliver on Cabinet's policy decisions from last year, and identify and avoid unintended consequences and regulatory gaps. The proposed reforms represent a significant shift in how insurance is regulated in New Zealand.
Key areas of the draft Bill include:
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A proportionality principle introduced into IPSA, requiring the Reserve Bank to publish a framework showing how regulation is tailored to the size and nature of different insurers.
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An expansion of the range of standards the Reserve Bank can issue, supporting a clearer and more transparent rules-based approach to keeping the sector sound.
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Measures to support the Reserve Bank to be a more transparent, risk-based, and proactive regulator.
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A two-tiered solvency framework recognising both a prudential margin, and a solvency margin that can be imposed on an insurer through a condition of licence or standard.
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Strengthened fit and proper requirements, extended governance obligations, and new supervisory powers including on-site inspections.
Our view
These reforms are broadly positive and long overdue. However, the detail will matter. The new enforceable standards regime could impose significant compliance costs, particularly for smaller insurers, and the Reserve Bank’s supervisory powers such as those for on-site inspections must be sufficiently clear so insurers know what to expect.
The 12-week window is a genuine opportunity to shape the final Bill. We encourage all affected insurers to engage.
What next?
The consultation closes 7 July 2026 and the Bill is expected to be introduced to Parliament in 2027, with enactment likely in late 2027 or early 2028. As part of the Parliamentary process it is likely that there will be an opportunity to make submissions to a Select Committee before the Bill is enacted. However, the reality is by that stage the Government is more likely to be committed to enacting the Bill without major amendments. So the chance to make submissions on the exposure draft should be taken up by potentially affected parties.
Once enacted, there may then be a transition period for the new regime to come into full force, but the duration of any transition is currently unknown. If you have any questions in relation to the draft Bill or are interested in making a submission, please contact one of our experts.
This article was co-authored by Darlene Hu, a solicitor in our Financial Services team.
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