A law change in September 2010 meant all insurers that wanted to continue doing business in New Zealand had three years to apply for and receive a licence.

Partners Life was one of the most recent to switch from a provisional to a full licence – its full licence was granted on September 3.  Some, such as RGA, are operating on a run-off licence.

About 15 are to have their licences cancelled. The Bank says they can be cancelled for a number of reasons, ranging from an insurer no longer wanting to carry on business to a regulatory action.

The bank said the Insurance (Prudential Supervision) Act was designed to ensure a sound and efficient insurance sector, and to promote public confidence in the insurance sector. New insurers entering the New Zealand market must apply for a licence.

Head of prudential supervision Toby Fiennes said the law recognised the importance of adequately protecting policyholder and the public interest, while also ensuring any failure of an insurer didn’t significantly damage New Zealand’s financial system or economy.

"The Reserve Bank achieves this through a system of licensing insurers, prudential requirements, supervising compliance and acting when an insurer is in financial distress or other difficulties. The purpose of the legislation is not to eliminate all risk of insurer failure, but to reduce the likelihood of failure."

Since March 2012 insurers have been operating under provisional licences, while being assessed for a full licence.

Three insurers that are no longer writing new policies in New Zealand continue to retain provisional licences.

A full list is available here.