Consultation: Draft Minimum Capital Test (MCT) Guideline (2026)

The proposed revisions are aimed at improving the financial resilience and stability of federally regulated property and casualty (P&C) insurers, including foreign P&C companies operating in Canada as a branch.

The Office of the Superintendent of Financial Institutions (OSFI) is proposing to:

• simplify the unexpired coverage formula for insurance risk to ensure a consistent interpretation of the capital requirements and that it is straightforward to use.
• amend the capital treatment of insurance receivables for foreign branches to clarify that the scope is limited to the capital treatment of funds withheld reinsurance arrangements and remove the requirement for OSFI’s prior review.
• update capital confirmation requirements for user fees to clarify the timing of the fees and how they apply.
• make minor adjustments and clarifications to apply the framework accurately.

Why it’s important 

OSFI regulates most insurers that provide insurance for homes, cars, and businesses in Canada. The MCT Guideline ensures property and casualty insurers have adequate capital to meet their obligations and cover potential losses. It clarifies how insurers should apply capital guidelines and helps to ensure the financial stability in the P&C insurance industry.

Insufficient capital can, in bad times, trigger economy-wide financial instability and cause problems for Canada’s financial system. The MCT helps protect policyholders and promotes public confidence in insurance companies.

OSFI collaborated with the Canadian Institute of Actuaries on an educational note for practitioners that will assist appointed actuaries and other practitioners in calculating the unexpired coverage.

Way forward

Your feedback will help inform final changes to the MCT Guideline (2026) and inform next steps in this process. Please provide your feedback to MCT-TCM@osfi-bsif.gc.ca by August 20, 2025.

The final MCT Guideline (2026) will be published on November 20, 2025, and come into effect on January 1, 2026.

Contact us

For more information or for help submitting your feedback, please contact MCT-TCM@osfi-bsif.gc.ca.