Insurance Down Under: Analyzing Prudential Solvency Regimes in Australia and New Zealand

Australia and New Zealand sit at opposite ends of the international solvency spectrum — as Australia is among the largest in the Asia Pacific region, while New Zealand is smaller in scale and undergoing significant evolution to align with international best practices. During this penultimate episode of “The Standard Formula” series on global prudential solvency requirements, host Rob Chaplin and associate Connor Williamson examine the two countries’ markets and regulatory regimes, regulatory structures, capital standards, governance and reporting requirements, and reinsurance frameworks, among other topics.🗝️ Key Points 🗝️ Top takeaways from this episode Australia's “Twin Peaks” Model: Australia's insurance sector is governed by a "Twin Peaks" system that divides responsibility between the Australian Prudential Regulation Authority (APRA), which oversees prudential standards and financial stability, and the Australian Securities and Investments Commission (ASIC), which handles market conduct and consumer protection.New Zealand's Regulatory Reform: In September 2025, the New Zealand government agreed to recommendations from the Reserve Bank of New Zealand (RBNZ) to reform the Insurance Prudential Supervision Act (IPSA). Changes are expected after a late 2026 election and aim to shift from a relatively light-touch model to a more proactive, intensive, and risk-based approach aligned with international standards.New Zealand's Seismic Risk Capital Standard: New Zealand imposes the highest risk-based capital standard in the world for seismic risk, requiring general insurers to hold sufficient capital or reinsurance to cover liabilities for a 1-in-1,000-year seismic event.Earthquakes and Climate: Both markets respond to natural disaster risks that manifest differently. In New Zealand, for example, earthquakes represent a significant risk and up to 80% of economic losses resulting from earthquakes are insured. In Australia, the most significant natural hazard risk is extreme weather events. Accordingly, between 2020 and 2025, approximately AU$22.5 billion was paid on claims for cyclones, bush fires and floods. 💡 Meet Your Host 💡Name: Robert ChaplinTitle: Partner, Insurance at SkaddenSpecialty: Rob primarily focuses on transactional and advisory work in the insurance sector. He advises on mergers and acquisitions, disposals, joint ventures and strategic reinsurances. He also counsels on regulatory issues, with an emphasis on Solvency II.Connect: LinkedIn 💡 Featured Guest 💡Name: Connor WilliamsonWhat he does: Connor has a wide-ranging financial institutions and regulatory practice, with extensive experience advising insurers, asset and wealth managers, banks, payment institutions, credit rating agencies, non-bank lenders and financial sponsors on transactional and stand-alone advisory matters.Organization: SkaddenWords of wisdom: “The first point to understand is that New Zealand has its own regulatory regime, and that's actually more different from Australia than you might expect.”Connect: LinkedInConnect with Skadden☑️ Follow us on X and LinkedIn.☑️ Subscribe to The Standard Formula on Apple Podcasts, Spotify, or your favorite podcast app.The Standard Formula is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.