Insurers, banks and financial market intermediaries have been told they will pay a prudential levy to the Reserve Bank of New Zealand by about mid-2027.

The levy was announced in the government’s May budget, when Finance Minister Nicola Willis said the payment would help cover the cost of services provided by RBNZ and was consistent with practices in countries such as Australia and Britain.

A consultation paper proposes full cost recovery, estimated at $NZ209 million ($172 million), excluding GST, over the three financial years from 2027-28 to 2029-30.

Insurers would pay 39% of that, or $NZ81 million ($67 million).

RBNZ does not support exemptions or a minimum size for entities captured by the levy.

New Zealand has 81 licensed insurers, 27 banks and 14 licensed non-bank deposit takers.

RBNZ expects to collect from 66 insurers, because eight foreign reinsurers or captives would be exempt and it omits companies in run-off or liquidation.

The paper considers different levy options, such as a flat amount or one based on insurer revenue.

Find the consultation paper here. Submissions close on October 16.