OSFI Actions to Address Operational Issues Stemming from COVID-19

Document Properties

  • Type of Publication: Letter
  • Date: March 27, 2020
  • To: Federally Regulated Insurers (FRIs)Footnote 1

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 IndustryOSFI Guidance / InitiativeDetails
General Policy
Life and P&CGuideline B-2 – Investment Concentration Limit; Guideline B-3 – Sound Reinsurance Practices and ProceduresPublic 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&CGuideline E4A - Role of the Chief Agent & Record Keeping RequirementsPublic consultation on draft revisions to the guideline, initially planned for late March 2020, is on hold.
Life and P&CDiscussion paper on technology and related risksAn OSFI discussion paper, initially planned for late April 2020, is on hold.
Capital Policy
Life and P&CUpdating 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.
LifeDraft 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.
LifeDevelopment 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 31stFootnote 2.
P&CGuideline E-25 - Internal Model Oversight FrameworkThe publication of the final version of Guideline E-25 is on hold.
Life and P&CDraft IFRS17 Insurance Returns The public consultation deadline for industry comment underway on draft IFRS 17 Insurance Returns is suspended for the time being.Footnote 3

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.


Footnote 1

Includes life, property & casualty and mortgage insurers; collectively referred to as FRIs or insurers.

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Footnote 2

Insurers that have already completed the QIS and wish to submit results by month’s end may do so.

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Footnote 3

Insurers that have finalized their comments and wish to send them to OSFI may do so.

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