Regulation

Regulation

The Fair Insurance Code

Act ethically
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The Insurance & Savings Ombudsman Scheme

Be subject to independent review
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The Insurance Council's Solvency Test

Be financially sound
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The Legal Framework for General Insurance in New Zealand

A comprehensive financial regulatory regime
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Solvency issues


The Insurance Companies (Ratings and Inspections) Act 1994 requires all insurers selling general or disaster insurance to:

  • Obtain a rating from an approved rating agency
  • Register that rating with the Registrar of Companies, and
  • Disclose the rating before entering into or renewing a contract of insurance.

Insurance companies who are required to obtain a rating must have a current rating at all times, and must renew their ratings annually. New annual ratings must be registered at the Companies Office.

A rating is an assessment of an insurer's ability to pay present and future claims, and is represented by a letter, number and/or symbol and forms part of a scale.

There are two approved rating agencies:

  • Standard & Poor's
  • A M Best
  • Fitch Ratings

Insurance company ratings are updated quarterly. You can view the current ratings schedule online at:
Insurance and Superannuation Unit Website

Written Disclosures

An insurance company's rating is given in its written disclosure. Two examples of written disclosures are:

  1. XYZ Insurance Ltd has an AA Very Strong claims paying rating given by Standard & Poor's (Australia) Pty Ltd on 10 July 2000. The rating scale is:

AAA

(Extremely Strong)

BBB+

(Good)

B+

(Weak)

AA+

(Very Strong)

BBB

(Good)

B

(Weak)

AA

(Very Strong)

BBB-

(Good)

B-

(Weak)

AA-

(Very Strong)

BB+

(Marginal)

CCC

(Very Weak)

A+

(Strong)

BB

(Marginal)

CC

(Extremely Weak)

A

(Strong)

BB-

(Marginal)

R

(Regulatory Action)

A-

(Strong)

        
  1. ZYX Insurance Ltd has a C Weak claims paying rating given by A.M. Best Company, Inc on 10 July 2000. The rating scale is:

A++

(Superior)

B+

(Very Good)

C

(Weak)

A+

(Superior)

B

(Fair)

C-

(Weak)

A

(Excellent)

B-

(Fair)

D

(Poor)

A-

(Excellent)

C++

(Marginal)

E

(Under Supervision)

B++

(Very Good)

C+

(Marginal)

F

(In Liquidation)

 

 

 

 

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