On July 22 2021 the Reserve Bank of New Zealand (RBNZ) released an exposure draft of the Interim Solvency Standard. The interim standard is planned to take effect in early 2022 and will be in force until a final solvency standard supersedes it following an amendment to the Insurance Prudential Supervision Act (2010) planned for 2024. Along with the draft standard, RBNZ issued an explanatory note that provides useful context and invites comments on the draft.
The interim standard is a single document intended to replace the five solvency standards that currently exist. It has been drafted to reflect the revised insurance accounting standard, IFRS17, and to embody the review principles that were shared with the industry in late 2020.
This exposure draft completes stage one of a three-year review, and RBNZ has targeted recalibration as a primary task for stage 2 of the review.
There are some significant differences between the existing solvency standards and the draft Interim Solvency Standard. RBNZ welcomes feedback on areas of ambiguity and unintended impacts.
Some of the unintended impacts arise from the more subtle differences in wording and we have mapped the draft Interim Solvency Standard against the existing Life Insurance Standard and Non-Life Insurance Standard (used by General Insurers and Health Insurers) to help Insurers to focus in on these changes.
These detailed mapping documents provide a quick reference for all insurers when reviewing their current returns against the new standard.