General
Definitions have been included in these instructions to assist insurers/societies with the preparation of their filings.
This section is not a complete set of insurance and insurance accounting definitions or interpretations. It is related specifically to the preparation of the LIFE Quarterly and Annual Supplement Returns.
Other definitions are contained in the federal
Insurance Companies Act and the various provincial and territorial insurance acts.
Additional sources of definitions include:
Definitions contained in this section take precedence, for the completion of the LIFE return, over any definition of the same terms contained in non-legislative sources.
There may be jurisdictional differences in the interpretations of certain terms; please consult your primary regulator for technical interpretations.
Defined Terms
Accident and sickness (A&S)
A&S means insurance
- against loss resulting from bodily injury to, or the death of, a person caused by an accident;
- under which an insurer undertakes to pay a sum or sums of money in the event of bodily injury to, or the death of, a person caused by an accident;
- against loss resulting from the sickness or disability of a person not caused by an accident, but excludes loss resulting from the death of the person as a consequence of sickness;
- under which an insurer undertakes to pay a sum or sums of money in the event of the sickness or disability of a person not caused by an accident; or
- under which an insurer undertakes to pay insurance sum of money in respect of the health care, including dental care and preventative care, of a person.
AAR
Appointed Actuary's Report.
Accumulation Annuities (Deferred Annuities)
Annuity contracts that are in the phase of accumulating periodic annuity premium contribution deposits made by contract holders together with investment returns earned on the accumulation.
Act
Insurance Companies Act (ICA - Federal) or
An Act Respecting Insurance or similar legislation in other provincial or territorial jurisdictions.
Ancillary Operations
Any function that can be considered to be providing support or service to the insurance or investment operations can be considered an ancillary operation.
Assume
To accept risk from a ceding company.
Assuris
Canadian Life & Health Insurance Compensation Corporation.
Beneficial Shareholder
The beneficial owner is the ultimate shareholder that controls the voting rights attached to the shares.
Canadian Branch
Canadian branch of a foreign life insurer/fraternal benefit society that is insuring in Canada the risks.
CFA
Canadian Fraternal Association.
Canadian Fraternal Benefit Societies
Federally and provincially incorporated fraternal benefit societies.
Canadian Life Insurers
Federally and provincially incorporated life insurers.
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*CARLI*
Capital Adequacy Requirements
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*Guideline – Insurance of persons* (Quebec only).
Cede
Transfer of risk to assuming reinsurers / insurers.
CIA
Canadian Institute of Actuaries.
CLHIA
Canadian Life & Health Insurance Association.
Coinsurance
A method of reinsurance under which the assuming company receives a proportionate share of all of the risks and cash flows of the policy. (One typical exception may be the policy fee, which remains with the ceding company.) The reinsurer receives its share of the premiums and benefits, and sets up its share of the reserves. Typically, the reinsurer pays an allowance to the ceding company to represent the reinsurer's share of the acquisition and maintenance expenses.
Control
Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities, in accordance with the meaning of the term under IFRS.
CUSIP Number
CUSIP stands for Committee on Uniform Securities Identification Procedures. A CUSIP number identifies most securities, including: stocks of all registered U.S. and Canadian companies, and U.S. government and municipal bonds.
Direct Written
Pertaining to policies/certificates issued by insurers/societies.
Disability Annuity
An annuity contract whereby an insurer promises to make periodic payments to an injured (disabled) party to whom a large settlement has been awarded as part of a bodily injury claim settlement. It does not include disability coverage under an individual or group accident and health insurance contract.
Foreign Life Insurers
Life insurers domiciled outside Canada and federally registered to transact life insurance, annuities and accident and sickness business on a Canadian branch basis in Canada.
Foreign Fraternal Benefit Societies
Fraternal Benefit Societies domiciled outside Canada and federally registered to transact life insurance, annuities and accident and sickness business on a Canadian branch basis in Canada.
Index linked products
Please refer to the
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*LICAT/CARLI* Guideline.
GMWB/GMBB
Guaranteed Minimum Withdrawal Benefit/Guaranteed Minimum Benefit Base
Gross
Direct Written + Assumed business.
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*LICAT/LIMAT*
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*Life Insurance Capital Adequacy Test/Life Insurance Margin Test (Federal only).*
Management Fees
Management fees means fees paid to a person(s) or an institution who has the power or responsibility to direct the affairs of the Segregated Funds and whose duties include the management of the investment portfolio of the Segregated Fund(s) and the provision of investment advice in connection therewith.
Modified Coinsurance
Reinsurance that differs from coinsurance only in that the reserves are transferred back to the ceding company while the risk remains with the reinsurer; the ceding company is required to pay interest to replace that which would have been earned by the reinsurer if it had held the assets corresponding to the reserves in its own investment portfolio. Commonly known as
Mod-co. (See also Coinsurance.)
Mortgage Loans
Industrial - Mortgages on real property consisting of buildings that are used primarily for industrial purposes including manufacturing and warehouses.
Hotels - Include hotels, motels, lodges and resorts.
Multiple Residential - Include all other residential properties under "multiple".
Other - Include all other types of real estate including vacant land.
Retail Stores - Mortgages on real property consisting of buildings that are used primarily as retail stores including shopping plazas
Residential - A residential mortgage is one that is secured by residential property. Residential property is defined as real property consisting of buildings that are used, or are to be used, to the extent of the majority of the floor space thereof, as one or more private dwellings. Note that the definition of residential mortgages differs from that applicable to the
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*LICAT/CARLI* calculations.
Single Residential Property - A single residential property is a dwelling having no wall in common with another dwelling and designed for occupancy by a single family. Note that the definition of residential mortgages differs from that applicable to the
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*LICAT/CARLI* calculations.
Net
Direct Written + Assumed – Ceded business.
OECD Member
Refers to the member countries in the Organization for Economic Co-operation and Development.
Office Mortgage
Mortgages on real property consisting of buildings that are used primarily as offices.
Payout Annuities
Annuity contracts that are in the periodic payout phase.
Registered and Unregistered Reinsurance:
The terms "registered" and "unregistered", are relevant in determining whether credit can be taken for reinsurance placed by federally regulated insurers/ societies and provincially incorporated insurers/societies, respectively.
Refer to the
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*LICAT* Guideline for further clarification.
Provincially Incorporated Insurers:
Registered insurers in a particular jurisdiction are insurers that are licensed in that jurisdiction. Certain regulators will also accept (re)insurers not licensed in their jurisdiction, but incorporated and licensed in another jurisdiction, as registered.
Please verify with your primary regulator.
Unregistered insurers are insurers not licensed by one or more provincial regulators, and are not federally registered.
Reinsurance:
The transfer of some or all of an insurance risk to another insurer. The company transferring the risk is called the "ceding company"; the company receiving the risk is called the "assuming company" or "reinsurer."
Reinsure
To transfer significant insurance risk from one insurer/society to another insurer/society.
Regulator
The federal or provincial agency that is responsible for the control and regulation of the insurer/society under its jurisdiction. The Primary Regulator is the Regulator in the jurisdiction under which the insurer/society: (a) obtained its order to carry on business; or (b) was incorporated.
Stop Loss
Cedant is reimbursed costs in excess of a specified amount (attachment point) up to a defined maximum.
Unregistered reinsurer
See definition under Registered and Unregistered Reinsurance.
VIE
Variable Interest Entities.
Yearly Renewable Term insurance (YRT)
Proportional on either excess or quota share basis; reinsurer charges a YRT premium rate that reflects the yearly cost of insurance.