The Reserve Bank has issued a warning to Quest Insurance Group (Quest) for failing to comply with the Insurance (Prudential Supervision Act 2010).
The niche motor insurer’s non-compliance included prolonged failures to maintain a statutory fund for its life insurance business, and maintain its minimum non-life solvency margin.
Quest has remedied the breaches and is in the process of implementing further risk management measures to prevent similar issues in future, states RBNZ. These breaches did not impact the firm’s ability to pay claims to policy holders.
“This warning is a reminder for all insurers of the importance of continuously managing their compliance obligations under IPSA through effective risk management and sound governance practices,” says Deputy Governor and General Manager of Financial Stability Christian Hawkesby.
“Prudential requirements such as good governance exist to protect policy holders and to promote the maintenance of a sound and efficient insurance sector.
“The findings from this investigation demonstrate the importance of effective risk management and the need for sound governance to ensure the New Zealand public has trust and confidence in the insurance sector.”
In a statement, Geneva Finance, Quest’s parent company, says the RBNZ investigation started in September 2023, and that Quest fully cooperated with its inquiries.
Malcolm Johnston, MD Quest Insurance, says the RBNZ investigation confirmed that overall solvency was “at all times maintained”, and that the RBNZ believed the backdating of a transaction which balanced the non-life solvency fund was likely to have also been a breach.
“Most importantly, the Reserve Bank investigation has found that these potential breaches did not affect Quest’s ability to pay sums due to policyholders,” says Johnston.
“Quest has since strengthened its oversight and governance as well as its operational processes and controls to prevent any such issues recurring.”
Click here to review RBNZ’s letter to Quest.