This article was originally published in Thomson Reuters Regulatory Intelligence

Market overview

New Zealand's insurance sector comprises both private and government-owned insurers. In the private sector, about 59% of business is general insurance, followed by 28% life insurance and 13% health insurance.[1] The government-owned insurers include:

• The Accident Compensation Corporation is a compulsory accident insurer which provides no-fault personal injury cover for everyone in New Zealand. As a result of the statutory accident compensation scheme, there is a prohibition on the right of individuals to sue for compensatory damages following injury. The scheme provides comprehensive accident insurance coverage and some financial compensation.

• The Natural Hazards Commission Toka Tu Ake (previously the Earthquake Commission) provides natural disaster insurance for residential buildings and some areas of residential land damaged by earthquakes, landslides, volcanic activity, tsunamis and hydrothermal activity. It also provides coverage for storm or flood damage on residential land.

In 2022, the government, Business New Zealand and the New Zealand Council of Trade Unions announced a proposal to introduce an income insurance scheme. The proposed scheme has been designed to give financial support to New Zealanders who lose their job through no fault of their own. It was proposed that the Accident Compensation Corporation would administer the scheme. The new government, elected in October 2023, decided to abandon the scheme when it came into power. The Income Insurance Scheme (Enabling Development) Act 2022 was repealed on March 31, 2025 under a sunset clause.

From October 2020, the Reserve Bank of New Zealand undertook a review of the key statute which governs insurers in New Zealand, the Insurance (Prudential Supervision) Act 2010 (IPSA). This included four separate options papers focused on parts of the IPSA and included reviewing the scope of the legislation, its applicability to overseas insurers, statutory funds, and the solvency regime.

In 2023, the Reserve Bank opened its omnibus consultation process, setting out its full set of proposals for amending the IPSA, drawing on previous public consultations and feedback. Utilising feedback received through the various consultations, the Reserve Bank is in the process of advising the Minister of Finance regarding the Reserve Bank's recommendations for amending the IPSA. If Cabinet and the Minister wish to proceed with amendments, an exposure draft amendment bill is likely to be released in late 2025.

Global association

The Reserve Bank of New Zealand is a member of the International Association of Insurance Supervisors (IAIS), a cooperative organisation of insurance regulators and supervisors from more than 200 jurisdictions. The IAIS promotes effective and globally consistent supervision of the insurance industry by:

• issuing global insurance principles, standards and guidance papers; and

• providing training and support on issues related to insurance supervision; and

• organising meetings and seminars for insurance supervisors.

The IAIS has a forward-looking role in identifying key trends and developments that could impact the business of insurance. The IAIS is currently focussed on the following emerging issues: Technological innovation (including digital), cyber risk, climate risk, conduct and culture, financial inclusion and sustainable economic development, and diversity and equity.

The IAIS has recently published its 2025-2029 Strategic Plan. Its core objectives are as follows:

• Monitor and respond to key risks and trends in the global insurance sector.

• Set and maintain globally recognised standards for supervision that are effective and proportionate.

• Support members by sharing good supervisory practices, promoting understanding of supervisory issues and facilitating capacity building.

• Assess comprehensive and globally consistent implementation of global standards.

Domestic regulation Regulatory framework

In New Zealand, insurers and insurance are comprehensively regulated via a twin peaks model, with separate entities governing prudential and conduct regulation.

Financial service providers (including licensed insurers and brokers) must be registered on the Financial Service Providers Register. The Register records the financial services that each entity is registered and licensed to provide, along with the dispute resolution scheme to which that entity belongs.

Prudential regulation

Insurers (and reinsurers) are subject to prudential regulation by the Reserve Bank in accordance with the Insurance (Prudential Supervision) Act 2010. A licence must be obtained from the Reserve Bank to allow insurance business to be carried on in New Zealand.

To obtain a licence, an insurer must prove it has appropriate governance and ownership arrangements in place, as well as a risk management programme. In addition, the insurer must hold a compliant financial strength rating, meet the required solvency standards, be able to carry on its business in a prudent manner and comply with anti-money laundering legislation. The insurer must also assess the fitness and propriety of all directors and senior managers, including the appointed actuary. If the insurer is incorporated or based overseas, the Reserve Bank will consider the law and regulatory requirements in that insurer's home jurisdiction.

It is an offence to carry on insurance business in New Zealand without holding a licence. There are also restrictions on the use of the word "insurance" and other associated words in the business names or titles of those not carrying out insurance business in New Zealand.

Conduct regulation

The Financial Markets Authority is authorised under the Financial Markets Conduct Act 2013 to govern the conduct of anyone who gives financial advice. This usually includes insurance brokers, but it may also apply to insurers if they provide financial advice as part of their business model. Under the Act, a person providing financial advice must obtain a licence from the Financial Markets Authority or be engaged by a licensed financial advice provider.

The Act imposes certain duties on persons providing financial advice, including the duty to prioritise the client's interests and if the financial advice is being provided to a retail client, the duty to comply with the Code of Professional Conduct for Financial Advice Services. The financial advice regulatory regime came into full effect in March 2023, following a two-year transitional period.

There is also industry self-regulation in place via the Insurance Council of New Zealand. This is a membership-based body which aims to provide consistent insurance practice in New Zealand. Most major insurers in New Zealand are members. The Council has a Fair Insurance Code which requires its members to act in an ethical manner and prescribes timeframes for the handling of complaints and claims.

The government has recently introduced a regime governing the conduct of financial institutions, including insurers. The regime came into force in early 2025. The purpose of the regime is to ensure that financial institutions treat consumers fairly by requiring those institutions to establish, implement, maintain and comply with effective fair conduct programmes.

Under the regime, insurers need to obtain a conduct licence. The licensing regime is monitored and enforced by the Financial Markets Authority.

Key rules and requirements

We summarise below the key requirements for senior management of insurers, as well as some legislation which has recently been introduced regarding whistle-blowing. Other key legislation affecting the insurance industry is discussed further below, under the Product-Specific Legislation section.

Senior management requirements

The Insurance (Prudential Supervision) Act requires insurers to apply a "fit and proper" policy for their directors and relevant officers. Pursuant to the Act, the Reserve Bank has issued a fit and proper standard which outlines various considerations that an insurer must consider when appointing an individual to a senior management position. These include:

• whether the person has the qualifications and experience reasonably expected for the position;

• whether the person has been involved in the management of any entity that has been put into liquidation, receivership, or any other insolvency procedure;

• whether the person has been found in any criminal or civil proceedings to have committed serious wrongdoing;

• whether the person is the subject of current disciplinary action or has had a finding of guilt in a disciplinary action;

• whether the person had been prohibited from being a director or in a senior role in New Zealand or overseas;

• whether the person has any conflict or potential conflict of interest.

The Reserve Bank has the authority to remove a chief executive officer, a chief financial officer or an appointed actuary of an insurer if there are reasonable grounds to believe that the office-holder is not a fit and proper person to hold that position.

The Reserve Bank may also apply to the courts to prohibit a person from participating in an insurance business if the person has committed serious wrongdoing.

Whistle-blowing rules

The government has created avenues by which employees or people associated with an organisation can report serious wrongdoing committed by that organisation. The Protected Disclosures (Protection of Whistleblowers) Act 2022 empowers employees and people associated with a company to complain directly to any relevant authority.

The Act protects a whistleblower who reports acts, omissions or conduct by an organisation that constitutes serious wrongdoing, including:

• an offence;

• a serious risk to public health or public safety;

• a serious risk to the environment;

• corruption; or

• grossly negligent behaviour.

Whistleblowers are generally entitled to full confidentiality unless there is a serious risk to public health or the law requires disclosure of certain identifiable information about the whistleblower. The appropriate body for the reporting of serious wrongdoing in the insurance sector is the Reserve Bank. The Reserve Bank then allocates the information to other government departments for further investigation if necessary.

Capital Reserve Requirements

The Reserve Bank issues solvency standards under section 55 of the Insurance (Prudential Supervision) Act. One or more of the standards may apply to a licensed insurer under the licensed insurer's conditions of licence. The Reserve Bank may exempt overseas insurers from compliance with a solvency standard or part of a solvency standard.

Solvency standards set out a common method for insurers to measure their risks and ensure they have at least a minimum level of available capital to absorb losses before policyholders are affected. When determining the solvency standards, the Reserve Bank considers risks including insurance risk, asset classification, market risk, credit risk and operational risk.

Previously, different solvency standards applied depending on the type of insurance business. There were separate solvency standards which applied to life business, non-life business, captive insurance, business in run-off and variable annuity business.

The Reserve Bank reviewed the solvency standards alongside its review of the Insurance (Prudential Supervision) Act 2010. The previous standards were revoked on December 5, 2024 and replaced by a new interim solvency standard which came into force on January 1, 2023 (except Appendix 4, which came into force on January 1, 2024). This standard is designed to streamline solvency calculations and facilitate sound solvency management now that NZ IFRS 17 (the new accounting standard for insurance contracts) is mandatory. This document also contains new requirements regarding the quality of reinsurance, which came into force on January 1, 2024.[2]

This new interim solvency standard was amended in mid-July 2023 and applies to all non-exempt insurers according to their licence conditions. The second amendment of the interim solvency standard became effective for all insurers on March 1, 2025. This amendment did not introduce new policy or increase capital requirements, but corrects unintended consequences from the initial implementation, and addresses the structure of the solvency regime and handling of NZ IFRS 17. The Reserve Bank will consult on a final solvency standard in the second stage of its review of the solvency standards. It has not yet released its revised timeline for those next steps.

According to the Insurance Council of New Zealand, a unique aspect of New Zealand's prudential regulatory regime is that the Reserve Bank applies an extremely high catastrophe risk charge on New Zealand licensed insurers. Most insurers globally must hold sufficient capital reserves or reinsurance to cover their liabilities for a 1-in-200 or 1-in-250-year catastrophe event. By contrast, New Zealand insurers must hold sufficient capital reserves or reinsurance to cover their liabilities for a 1-in-1000-year catastrophe event.

This means insurers cannot use their capital as freely in New Zealand as those overseas. This prevents domestic insurers from investing as much capital in the market, which can yield higher returns on investment and lower the cost of premiums charged.

Product-specific legislation

The primary statutes governing the conduct of New Zealand insurers and brokers, and the interpretation of insurance contracts are:

Life Insurance Act 1908

This provides for the assignment of life insurance policies and contains provisions relating to life insurance policies taken out by or for the benefit of minors.

Marine Insurance Act 1908

This is virtually identical to the UK's Marine Insurance Act 1906 and the other Commonwealth marine insurance statutes.

Law Reform Act 1936

A key provision in this Act is section 9, which provides that where a person is insured against liability to pay any damages or compensation, the amount of their liability forms a statutory charge on all insurance money that becomes payable in respect of that liability, even though such liability has not at that point been established. Every charge against an insured person in such circumstances is enforceable by way of an action against the insurer in the same way and in the same court as if the action were an action to recover damages or compensation from the insured.

Insurance Law Reform Act 1977

Includes provisions limiting an insurer's ability to avoid a policy because of misstatements by the insured, or to decline a claim in reliance on certain types of exclusions, or because of non-compliance with time limits for making a claim.

Insurance Law Reform Act 1985

Abolished the common law requirement for an insurable interest in policies of life insurance, restricted the application of "average" clauses in policies for dwellings, and allowed purchasers of land and fixtures to have the benefit of the vendor's insurance during the period between signing the contract of sale and settlement.

Consumer Guarantees Act 1993

This sets minimum guarantees for products and services, for the protection of consumers. The term "services" is defined as including a contract of insurance, including life assurance and life reassurance.

Natural Hazards Insurance Act 2023

Sets out the functions of the Natural Hazards Commission Toka T# Ake and state insurance of residential buildings and certain residential land against natural disasters. This replaced the previous Earthquake Commission Act 1993 and was designed to update the natural hazards insurance framework following the experience of the Christchurch Earthquake sequence.

Insurance Intermediaries Act 1994

Places obligations on brokers and insurance intermediaries including in relation to premiums and handling of broking client account money.

Fair Trading Act 1986

Prohibits unfair contract terms in standard form consumer contracts, including consumer insurance contracts, although there are broad exemptions for terms which could not be considered under the unfair contract terms regime.

Accident Compensation Act 2001

Governs the accident compensation regime.

Insurance (Prudential Supervision) Act 2010

Provides for the prudential regulation and licensing of insurers by the Reserve Bank.

Financial Markets Conduct Act 2013

Governs how financial advice products (including contracts of insurance) are created, promoted and sold, and the ongoing responsibilities of those who offer, deal and trade them. It places obligations on financial advice providers, including insurance brokers.

Contracts of Insurance Act 2024 and Contracts of Insurance (Repeals and Amendments) Act 2024

Since 2018, the New Zealand government began a multi-stage consultation process with New Zealand insurers about proposed reforms to New Zealand's insurance contract law. The consultations included an initial review and issues paper, an agreed set of policy reforms and an exposure draft Bill. Following a change in government in 2023, it was unclear whether insurance law reform would be prioritised. However, an insurance contract Members Bill submitted by the opposition was drawn through a biscuit tin ballot process, leading the government to introduce its own Contracts of Insurance Bill in May 2024.

The government bills adopted the policy positions developed through the earlier consultation process. The bills were sent to the select committee for review and in November 2024, the Contracts of Insurance Act and the Contracts of Insurance (Repeals and Amendments) Act were passed into law. The acts provide for commencement on a date to be set, which cannot be later than three years after the passing of the acts, so, by November 2027 at the latest. There is ongoing consultation regarding the commencement date, and the development of regulations.

The Contracts of Insurance Act (including the Repeals and Amendments Act):

• amalgamates many existing pieces of legislation and common law principles into one statute;

• introduces a distinction between consumer and consumer and non-consumer policies;

• abolishes the duty of disclosure for consumer policies, replacing it with a duty to take reasonable care not to make a misrepresentation. The onus shifts to insurers to ask the right questions when offering or renewing insurance policies;

• introduces a new non-consumer duty of disclosure, the duty to make a fair presentation of the risk, which requires disclosure of material information that the policyholder knows or ought to know;

• introduces a proportionate remedy to cases of non-disclosure, and a matrix of remedies depending upon what the insurer would have done had the correct information been disclosed. Avoidance is only available where the insurer can show that it would not have offered the policy at all. Otherwise, the proportionate remedy allows for alternative terms to be applied, and for claims payments to be reduced in proportion to any under-payment of premium;

• requires insurers to provide information to proposed policyholders before entering into a policy, including information about the policyholder's duties of disclosure and the consequences of not complying, and notice about whether or not the insurer will access third-party information about the policyholder before entering into the policy;

• requires insurance policies to be written and presented clearly;

• alters the existing application of the unfair contract terms regime to consumer contracts by removing the exemptions, and allowing all terms to be scrutinised for unfairness, except those that relate to the main subject matter of the contract, and extends the regime to non-consumer contracts where the premium charged is less than $20,000 (including GST);

• extends powers to the Financial Markets Authority to monitor and enforce compliance with new requirements.

Implementation of the new Contracts of Insurance Acts will require significant work by insurers to update documents, systems and policy wordings to address the new requirements, and to remove potentially unfair contract terms.

Tax and company law requirements

Insurers and brokers must also comply with tax and company law requirements, as set out in the Goods and Services Tax Act 1985, the Companies Act 1993, the Income Tax Act 1994, the Tax Administration Act 1994, the Taxation Review Authorities Act 1994 and the Financial Reporting Act 2013.

Investment management and markets

There are no express limitations on insurers as to what types of assets they can invest in, except in respect of life insurers. Section 99 of the Insurance (Prudential Supervision) Act sets out the requirements for life insurers, including a prohibition on the investment of assets of a statutory fund in an associated person that is not a subsidiary of the life insurer without the Reserve Bank's approval.

An insurer's investment decisions may affect its compliance with the applicable solvency standards.

Enforcement and investigation

Regulatory investigation

The Reserve Bank has supervisory and enforcement powers in respect of insurers. Under the Insurance (Prudential Supervision) Act, it is empowered to take appropriate action in respect of licensed insurers and other persons that have failed, are failing, or are likely to fail to comply with the Act or the regulations or are otherwise in financial or other difficulties.

The Financial Markets Authority has wide-ranging powers to monitor compliance, investigate and take enforcement action against conduct that may contravene the Financial Markets Conduct Act 2013.

The Authority also oversees a range of financial markets legislation and has regulatory and enforcement powers in respect of a number of other statutes, including the Anti-Money Laundering and Counter Financing of Terrorism Act 2009 and the Financial Service Providers (Registration and Dispute Resolution) Act 2008.

Complaints procedures

Financial service providers (including insurers and brokers) are required to have an internal dispute resolution process that must deal with any issues or complaints in the first instance. Each provider that provides financial services to retail clients must also be a member of an approved dispute resolution scheme. Such schemes are a form of consumer protection, so they can only consider complaints made by consumers or small organisations (19 or fewer full-time employees).

The approved schemes for insurers and brokers are set out in the table below, along with the jurisdictional limit for any claims under that scheme. The jurisdictional limits for all schemes have increased in July 2024:

Where possible, the schemes will attempt to resolve any complaint by agreement using negotiation, conciliation or mediation. If a complaint is resolved by agreement, that agreement is binding on both parties. If the scheme makes a determination following the investigation of the complaint, the participant financial service provider is generally bound by the decision. If the complainant does not accept the determination, they still have the right to bring a claim in court.

Alternative dispute resolution

Alternative dispute resolution is common in New Zealand. Insurers generally prefer to use negotiation and mediation, rather than arbitration.

Arbitration clauses in insurance contracts entered into by policyholders who are not in trade are not binding, although the parties may agree to submit a dispute to arbitration after a dispute has arisen.[3] This includes clauses that:

• require disputes arising out of or in relation to a contract to be referred to arbitration;

• make arbitration a condition precedent to the bringing of other claims or actions; or

• limit the right to bring other actions because of an arbitration or arbitration award.

Court proceedings

Disputes may also be referred to the courts. The District Court hears claims up to the value of NZ$350,000. Any claim in excess of that amount must be heard in the High Court.

At both levels of jurisdiction, but particularly in the District Court, parties are encouraged to attempt to resolve disputes by agreement using a judicial settlement conference or other alternative dispute resolution measures. At a judicial settlement conference, a judge will assist the parties in achieving a settlement. The judge does not make any rulings or orders, their role is similar in this context to that of a mediator or referee.

In 2019, the Canterbury Earthquakes Insurance Tribunal was established to provide homeowners with a fair, speedy and flexible means of resolving insurance disputes arising from the 2010/2011 Canterbury earthquakes. The Tribunal can only consider claims for physical loss of or damage to residential buildings or property arising from those earthquakes.

In the 2023/2024 year, the Tribunal resolved and closed 16 applications. As of June 30, 2024, 175 applications had been lodged with the Tribunal, of which 164 were accepted, with the remainder outside of jurisdiction. Since the Tribunal's inception, the majority of claims (69) have settled at or after a further Case Management conference.

New Zealand Claims Resolution Service

The New Zealand Claims Resolution Service (NZCRS) was established in 2023 as a national service to provide independent support to homeowners to resolve residential insurance issues resulting from natural disasters.

In November 2018, the government established a Public Inquiry into the Earthquake Commission. The Inquiry's report made a range of recommendations, including that a standing dispute resolution mechanism be developed, drawing on the experience of the Christchurch Earthquakes. The NZCRS is the response to the Inquiry's recommendation.

The NZCRS builds on the knowledge, experience and support of the Greater Christchurch Claims Resolution Service and Residential Advisory Services and replaces both organisations.

The NZCRS is hosted and operated by MBIE, with support from the Treasury and Natural Hazards Commission Toka T# Ake. The Minister of Commerce and Consumer Affairs has ministerial responsibility for the NZCRS.

The NZCRS provides free advice, case management and, where appropriate, legal, engineering and wellbeing support to homeowners. Legal advice is provided through Community Law Canterbury, and engineering and technical advice is provided through Engineering New Zealand.

Insolvency and policyholder protection

New Zealand has several measures in place to improve policyholder security. The Insurance (Prudential Supervision) Act sets out particular rules including that insurers must publish their financial strength rating and comply with the prescribed solvency standards. In addition, life insurance policies are currently protected by statutory funds.

As part of its review of the Insurance (Prudential Supervision) Act, the Reserve Bank carried out a review of policyholder security measures, which included considering whether legislation should be introduced to set minimum termination values, whether non-life insurance policies should also be protected by statutory funds, and whether there should be a policy guarantee scheme.

The Reserve Bank omnibus consultation which commenced in 2023 will consider changes and the introduction of new policyholder protections. The Reserve Bank is finalising its policy preferences and will make its recommendations to the Minister of Finance on recommendations for amending the Insurance (Prudential Supervision) Act . If it is accepted that amendments are needed, an exposure draft amendment bill is likely to be released in late 2025.

Data protection

The Privacy Act 2020 governs the protection of personal information. One of the purposes of the Act is to give effect to internationally recognised privacy obligations and standards in relation to the privacy of personal information, including the OECD Guidelines and the International Covenant on Civil and Political Rights.

The Act outlines 13 information privacy principles including provisions relating to the collection, sources, storage and security of personal information. The Privacy Amendment Act 2023 introduces a new information privacy principle which requires an agency to notify an individual when it collects personal information about them indirectly, as well as the purpose for which that information is collected, the intended recipients of that information, and their rights under the Privacy Act information privacy principles The substantive changes to the information privacy principle will commence on May 1, 2026.

Separately, the government has published guidelines in relation to data protection, including ethics, governance, management, data standards, stewardship, storage and open data.

Corporate governance

Before granting a licence to an insurer, the Reserve Bank must be satisfied that the insurer meets certain corporate governance requirements. The Reserve Bank has published guidelines on the minimum requirements,[4] which include consideration of:

Ownership — The Reserve Bank may consider factors including integrity (in personal behaviour and business conduct), soundness of judgement, financial soundness and strength, and nature and scope of business.

Governance structure — It is important that governance is kept separate from the insurer's ownership: responsibilities should be allocated through a formal charter. There should also be processes in place to provide the governing body with information

which enables it to identify, monitor and manage risks. Governance arrangements should be disclosed to shareholders or member policyholders, and other stakeholders, and in the insurer's annual report.

Composition — It is expected that a licensed insurer will have a minimum of two directors, but the number of directors and size of the governing body should reflect the size and nature of the business. There are various expectations regarding independence, conflicts of interest, performance assessments, and residence in New Zealand.

Independence — Directors should be free from any associations that could materially interfere with the exercise of independent judgment. There are criteria for assessing independence, including any financial or other obligation the director may have to the licensed insurer or its directors, the director's employment history, remuneration and shareholding.

Qualifications and experience — the directors must meet the requirements of the Reserve Bank's fit and proper standard for licensed insurers, including the need to have appropriate qualifications and experience. It is expected that the governing body will have a full range of skills, knowledge and experience to run the licensed insurer and its operations, and avoid a concentration of particular skills and experience. In addition, directors should regularly undertake relevant training.

Committees — there should be a separate audit committee and, depending on the size and type of the insurer's business, the governing body should establish other committees dedicated to remuneration, compliance, risk and director appointments.

Where an applicant insurer is an overseas entity, the Reserve Bank must also be satisfied that the corporate governance standards applying to the applicant in the applicant's home jurisdiction are appropriate, and at least as satisfactory as the New Zealand governance requirements.

Further general guidance on good corporate governance in New Zealand can be found in the Financial Markets Authority's corporate governance handbook. The New Zealand Stock Exchange has also published a corporate governance code dated December 10, 2020, which applies to NZX-listed issues.

Financial crime prevention

New Zealand has been a member of the Financial Action Task Force (FATF) since 1991. The FATF is an independent inter- governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction. New Zealand is also a member of the Asia/Pacific Group on Money Laundering (APG).

New Zealand overhauled its regulatory regime for combatting money laundering and terrorist financing with the introduction of the Anti- Money Laundering and Countering Financing of Terrorism Act 2009.

Licensed insurers (unless exempt), financial advice providers, and client money or property service providers are all subject to AML/ CFT obligations under the Act. As with the other regulatory regimes, insurers are supervised by the Reserve Bank and financial advice/ client money or property service providers are supervised by the Financial Markets Authority. The main obligations are to:

• Assess the money laundering and terrorism financing risk for the business.

• Design, implement and maintain an AML/CFT compliance programme that sets out the business procedures, policies and controls for detecting, managing and mitigating such risks of money laundering, and the financing of terrorism that the business might reasonably expect to face.

• Submit an annual report on the business risk assessment and compliance programme.

The FATF and the APG have conducted several reviews of New Zealand's regime.[5] In April 2021, they published a report which found that:

• New Zealand's AML/CFT system is effective in many respects. Particularly strong results were noted as being achieved in relation to the confiscation of proceeds of crime. New Zealand also has a good understanding of its money laundering and terrorist financing risks, uses financial intelligence, investigates and prosecutes money laundering and terrorist financing activity effectively, and cooperates with its international partners well. However, major improvements would be needed to strengthen the supervision and implementation of preventative measures, improve the transparency of legal persons and arrangements, and ensure the effective implementation of targeted financial sanctions.

• New Zealand covers financial institutions, designated non-financial businesses and professions and most virtual asset service providers as reporting entities under the act. While this was felt to represent significant progress, further work would be needed to fully embed AML/CFT measures among designated non-financial businesses and professions, and a number of preventive measures would need reform to meet the FATF Standards. Improvement of the technical framework in relation to targeted financial sanctions, beneficial ownership of legal persons and arrangements and the powers and responsibilities of supervisors was needed.

Following a review of the AML/CFT Act, in October 2022, the government agreed to introduce changes to AML/CFT regulations, which would come into force in three stages from July 31, 2023 to June 1, 2025.

Phases one and two expanded compliance obligations beyond financial institutions to include banks, casinos, lawyers, accountants, real estate agents, and high-value goods dealers, targeting high-risk activities and disrupting illicit transactions.

Phase three builds on these changes, aligning New Zealand with global AML/CFT standards while tightening compliance rules, increasing regulatory scrutiny, and imposing greater obligations on businesses. From June 1, 2025, Phase three took effect, being the final stage of the reforms.

Climate-related disclosures

A mandatory climate-related disclosures regime was introduced in New Zealand in 2021. It requires climate reporting entities to prepare annual climate statements in accordance with New Zealand's Climate-Related Disclosure standards, which were published by the External Reporting Board in December 2022. Reporting against the standards started on January 1, 2023, with the first climate statements filed in the first quarter of 2024. The standards apply to large financial market participants , including large, licensed insurers. The Financial Markets Conduct Act 2013 requires the market participants to prepare climate statements that comply with the climate-related disclosure framework. The goal of the mandatory disclosures is to:

• ensure that the effects of climate change are routinely considered in business, investment, lending and insurance underwriting decisions;

• help climate reporting entities better demonstrate responsibility and foresight in their consideration of climate issues; and

• lead to more efficient allocation of capital, and help smooth the transition to a more sustainable, low-emissions economy. The Financial Markets Authority is responsible for compliance and enforcement of the reporting regime.

In February 2025, the Ministry of Business, Innovation & Employment (MBIE) consulted on adjustments to the climate-related disclosures regime. The rationale for the consultation was the feedback from New Zealand businesses suggesting that the cost of climate reporting is excessive and disproportionate, with a focus on compliance rather than positive action which would prepare businesses for climate change. There was also a concern that the director liability settings were contributing to high legal and consultancy costs, and whether these should be adjusted to reduce but not remove the potential liability of directors for the content of climate statements. The consultation is also seeking feedback as to whether the reporting thresholds should be adjusted to reduce the number of entities who must report, and whether subsidiaries of multinational corporations should file their parent company climate statements in New Zealand. MBIE has not yet indicated whether it will proceed with any reforms to the regime.

[1] Based on premiums earned in the December quarter of 2021.

[2] These requirements come into force a year earlier for the life insurance business (i.e., from January 1, 2023).

[3] Insurance Law Reform Act 1977, s 8.

[4] Reserve Bank of New Zealand, Governance Guidelines for Licensed Insurers dated June 2011.

[5] Mutual Evaluation of New Zealand dated October 16, 2009, Mutual Evaluation of New Zealand: 2nd Follow-Up Report dated October 21, 2013, Mutual Evaluation Report New Zealand dated April 29, 2021, Follow-Up Report New Zealand dated May 31, 2022. These are all published on the FATF website.

This Country Guide was kindly provided by Melissa Bell, special counsel, and Rajin Singh-Sandhu, graduate, at Fee Langstone. The views expressed are the authors' own.