Photo: RNZ / Samuel Rillstone
The insurance industry is being warned to comply with financial rules after the Reserve Bank (RBNZ) issued a rare public warning for prolonged breaches of rules by the Quest Insurance Group.
The Quest Insurance Group, a subsidiary of the Geneva Finance group, was found to have failed to maintain a minimum solvency margin for its non-life insurance business and not having a required reserve fund for its life insurance business.
Quest offers life, vehicle, and credit insurance cover.
Insurers are required to have sufficient levels of money to cover potential claims as a condition of their licence.
The breaches were technical, which the company reported itself and had now been sorted, RBNZ director of enforcement and resolution Kerry Beaumont said.
The company accepted the breaches which occurred during 2021 and 2022 and the RBNZ investigation said the company had claimed a positive margin level covering some insurance products when it was in deficit.
The company also wrongly claimed an exemption from having to have a special fund to cover other products.
"At all times they were able to pay their policy holders. [But] we never want to see non-compliance among our insurers and that's why we're issuing this warning," Beaumont said.
The warning was serious but appropriate, Beaumont said and it sent a broader message to the industry.
"The warning is a reminder for the insurance industry that effective risk management and sound governance is essential to protect policy holders and that we expect insurers to be compliant at all times."
Beaumont would nott comment on whether scrutiny of the sector had been increased, but said it had regulators "in the field all the time".
She avoided commenting on whether consumers could have confidence in the industry, but said customers could be confident the RBNZ was looking after their interests.
The breaches, if taken to court could have resulted in fines of up to $500,000 for each breach.
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