Document Properties
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Type of Publication: Letter
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Date: March 27, 2020
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To: Federally Regulated Insurers (FRIs)
OSFI continues to actively monitor the evolving situation with COVID-19. It is taking a number of steps to reprioritize its work and requirements to allow institutions to focus on their resilience efforts and their contributions to financial stability, including:
- Setting expectations of mortgage insurers related to payment deferrals; and
- Suspending requirement for institutions to provide semi-annual progress reporting on IFRS 17.
Payment deferrals will not cause insured mortgages to be treated as delinquent or in arrears
In determining regulatory capital requirements, provided there is no claim outstanding on a mortgage loan, mortgage insurers should not consider a mortgage loan to be delinquent or in arrears if a deposit-taking institution has approved a deferral of mortgage payments, and the borrower respects the payment deferral terms and conditions.
This capital treatment applies for the lesser of 6 months or the duration of the payment deferral. OSFI may require additional reporting in respect of these loans.
IFRS 17 semi-annual progress reports are suspended
OSFI has decided to suspend, until further notice, the IFRS 17 semi-annual progress reporting that insurers are required to file with OSFI.
Additional Items
In its March 13
press release, OSFI communicated that, in light of current developments, it is suspending all of its consultations and policy development on new or revised guidance until conditions stabilize. This decision allows insurers to focus their efforts on addressing challenges posed by COVID-19 and current market conditions. Included below is a table listing policy and other initiatives affecting insurers that are underway, or planned for the near future, that are being put on hold until further notice.
| Affected Industry | OSFI Guidance / Initiative | Details |
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| General Policy |
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| Life and P&C | Guideline B-2 – Investment Concentration Limit; Guideline B-3 – Sound Reinsurance Practices and Procedures | Public consultation on draft revisions to Guideline B-2, initially planned for late March 2020, is on hold. This will affect timelines for finalization of Guidelines B-2 and B-3. |
| Life and P&C | Guideline E4A - Role of the Chief Agent & Record Keeping Requirements | Public consultation on draft revisions to the guideline, initially planned for late March 2020, is on hold. |
| Life and P&C | Discussion paper on technology and related risks | An OSFI discussion paper, initially planned for late April 2020, is on hold. |
| Capital Policy |
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| Life and P&C | Updating insurance capital frameworks for IFRS 17 and accompanying Quantitative Impact Study (QIS) | In its August 13, 2019
letter, OSFI communicated its intent to conduct a directed consultation on the draft capital tests, updated for IFRS 17, as well as launch a QIS, in June 2020. That exercise is on hold until further notice. |
| Life | Draft 2020 Life Insurance Capital Adequacy Test (LICAT) | On February 26, 2020, OSFI proposed to update the LICAT framework and published a 2020 version of the LICAT (OSFI
letter). The public consultation and finalization of the proposed updates are on hold. |
| Life | Development of a Standard Approach for Determining Capital Requirements for Segregated Fund Guarantee (SFG) Risk | OSFI is developing a standard approach for determining capital requirements for SFG risk, with the intention of implementing that approach on January 1, 2023. Policy development work is on hold. Therefore, insurers participating in the current SFG QIS are no longer required to submit results by March 31st. |
| P&C | Guideline E-25 - Internal Model Oversight Framework | The publication of the final version of Guideline E-25 is on hold. |
| Returns |
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| Life and P&C | Draft IFRS17 Insurance Returns | The public consultation deadline for industry comment underway on
draft IFRS 17 Insurance Returns is suspended for the time being. |
In addition, recognizing that some insurers may encounter difficulties in meeting deadlines for certain near term regulatory filings, OSFI is prepared to offer flexibility with upcoming filings. Insurers requiring flexibility should reach out to their OSFI Lead Supervisor.
If OSFI decides to further modify supervisory, regulatory or capital expectations, insurers and other stakeholders will be notified in a timely manner.
OSFI will continue to engage insurers on further developments over the coming weeks. Insurers should be proactive in informing their OSFI Lead Supervisor of any financial or operational challenges they encounter as a result of COVID-19.