NZ cenbank to license life insurers - FinMin
WELLINGTON, Dec 17 (Reuters) - The New Zealand government said on Monday all insurance companies operating in the country would have to be licensed by the central bank to ensure they are financially fit. Finance Minister Michael Cullen said the legislation would require larger insurers to obtain an approved rating from a credit agency and would be introduced next year, coming into force in 2010.
"The purpose of licensing is to ensure that insurers are 'fit for business' by demonstrating their capacity to manage the business they undertake, identify and manage their risks effectively, and have sufficient financial strength," Finance Minister Michael Cullen said in a statement.
The insurance sector in New Zealand is dominated by foreign players, such as AMP Ltd (AMP.AX), AXA (AXAF.PA) and Insurance Australia Group (IAG.AX).
Total assets held by life insurers currently stand at around NZ$9 billion ($6.9 billion). General insurers had gross premium income of more than NZ$3 billion in 2006.
No one regulator has oversight or responsibility for the insurance sector in New Zealand, with existing regulation seen as relatively light.
In June, the Reserve Bank of New Zealand was appointed as the regulator of the NZ$18 billion non-bank finance sector in a move aimed at toughening rules in the sector in the wake of a number of bankruptcies. ($1=NZ$1.31) (Reporting by Kazunori Takada)
