The Reserve Bank should have the power - and where appropriate, should exercise that power - to collect information about all insurance written in New Zealand, including insurance provided by foreign insurers.
This is submitted by the New Zealand Law Society in its comments to the Reserve Bank on the bank's Issues Paper: Review of the Insurance (Prudential Supervision) Act 2010.
The Law Society says the provisions in the Act are not fit for purpose because they do not provide for new forms of insurance enabled by technology which is not limited by geographical boundaries.
It says not all foreign insurers that provide insurance coverage in New Zealand are required to be licensed. The Reserve Bank considers each foreign insurer on a case by case basis, taking into consideration whether they have a place of business, staff or infrastructure in New Zealand and whether they market insurance directly to New Zealand customers.
An International Monetary Fund report released since the Reserve Bank's Issues Paper has highlighted that there is no data on the number of overseas insurers offering insurance contracts in New Zealand without a licence.
"The insurance prudential regulator needs to have sufficient detail of the insurance business written in New Zealand in order to be able to appropriately supervise insurers," the Law Society says in its recommendation that the Reserve Bank be given the power to collect information on all insurance written in New Zealand.
The Law Society says it does not consider it necessary to apply all aspects of the regime in the Act to all insurers providing insurance coverage in New Zealand.
"To do so may have a damaging impact on the availability of reinsurance cover or the participation of foreign insurers in the New Zealand insurance market more generally," it says.
"The Law Society recommends that the Reserve Bank be provided with more flexible exemption powers to permit appropriate oversight without inhibiting participation in the New Zealand insurance market."