News Release
For Immediate Release
OTTAWA ─ February 11, 2021 ─ Office of the Superintendent of Financial Institutions
Today, the Office of the Superintendent of Financial Institutions (OSFI) concluded its review of reinsurance practices by issuing final revised versions of Guideline B-3,
Sound Reinsurance Practices and Procedures, and Guideline B-2,
Property and Casualty Large Insurance Exposures and Investment Concentration.
These revised guidelines reflect changes in industry practices over the past 10 years and come into effect on January 1, 2025.
The revised
Guideline B-3 sets out OSFI’s expectations for federally regulated insurers (FRIs) to better identify and manage risks arising from the use of reinsurance, particularly counterparty risk.
The revised
Guideline B-2 will require property and casualty FRIs to be able to cover the maximum loss related to a single insurance exposure on any policy it issues, assuming the default of its largest unregistered reinsurer on that exposure.
Federally regulated insurers’ existing insurance business should continue to comply with the Guideline B-3 and Guideline B-2 currently in force until January 1, 2025. This nearly three-year transition period permits FRIs time to effectively adjust their business practices to comply with the new guidelines before they come into force.
OSFI will hold industry information sessions in the coming months to provide additional clarity regarding OSFI's expectations and supervisory approach.
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OSFI’s suite of regulatory and prudential tools must continuously evolve to keep pace with industry practices. The refinements to Guidelines B-3 and B-2 do just that, and will help ensure that federally regulated insurance providers continue to have the necessary resources to meet their commitments to policyholders.
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About OSFI
The Office of the Superintendent of Financial Institutions (OSFI) is an independent agency of the Government of Canada, established in 1987, to protect depositors, policyholders, financial institution creditors and pension plan members, while allowing financial institutions to compete and take reasonable risks.
Media Contact
OSFI – Media Relations
Media-Medias@osfi-bsif.gc.ca
343-550-9373