“These breaches did not impact on Quest’s ability to pay out on claims to policy holders,” the RBNZ added.
Hawkesby said findings from the investigation showed the importance of effective risk management and the need for sound governance to ensure public trust and confidence in the insurance sector.
The RBNZ said it was obliged to ensure all regulated banks and insurers followed the proper rules to ensure the resilience of New Zealand’s financial system.
The relevant warning to Quest was in relation to the Insurance (Prudential Supervision) Act 2010, known as IPSA.
“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,” the central bank added.
The RBNZ said it applied its enforcement framework and warning policy in its decision to issue the warning to Quest.
Quest Insurance Group said its parent company Geneva Finance announced the investigation to the market when it was started in September 2023.
The company said it had fully co-operated with RBNZ inquiries.
Quest Insurance managing director Malcolm Johnston said one matter related to a delay in establishing a statutory fund for Quest’s life business in 2021.
“The second related to a failure to maintain the required solvency margin for its non-life business in 2022,” he added.
“However, the RBNZ investigation has confirmed that overall solvency was at all times maintained.”
Johnston said the central bank believed the backdating of a transaction that 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 policy holders.”
He said Quest had since strengthened its oversight and governance, and its operational processes and controls to prevent any such issues recurring.
“This includes strengthening of Quest’s board and management positions as well as a core system replacement and company-wide policy and procedures upgrades.”