Office of the Superintendent of Financial Institutions
In September 2012, OSFI issued the Life Insurance Regulatory Framework. The Framework outlined OSFI’s priorities and addressed issues such as corporate governance and risk management, evolving regulatory capital requirements, and promoting the transparency of information on the financial condition of life insurance companies. The Framework established a timeline of planned initiatives to 2016, to help life insurers and industry stakeholders in their planning processes. OSFI provides here an update on progress made during the first year of implementing the Framework.
Specific initiatives to date:
The timelines set in the September 2012 Life Insurance Regulatory Framework to implement the various regulatory capital initiatives allowed for developing the proposed changes, implementing them, and transitioning to the new regulatory capital regime.
After further review, the milestone for finalizing the life insurance capital framework has been shifted to 2016 with implementation now targeted for 2018 (see Annex A).
The revised timeline is needed to provide OSFI more time to develop, refine and calibrate the capital framework components, while continuing consultations with industry stakeholders through the Quantitative Impact Studies process. The new dates also give OSFI and insurers more time to prepare and make changes to their information systems, and take account of the impact of the upcoming changes to domestic actuarial and international accounting standards on the regulatory capital framework.
OSFI is satisfied that the additional time will not pose undue risks to the life insurance industry. The financial crisis demonstrated that the current regulatory capital framework continues to be robust and broadly reflects the financial condition of Canada's life insurers. OSFI continues to believe that, in aggregate, the industry currently has adequate financial resources (total assets) for its current risk. However, the updated framework should result in a better alignment of financial resources to the underlying risks.
OSFI will provide further progress updates to insurers and industry stakeholders, as required, as we continue to implement the new Life Insurance Regulatory Framework. Consultations with insurance industry stakeholders will continue to be an important part of the implementation work.