Backgrounder: Guideline E-15 - Appointed Actuary: Legal Requirements, Qualifications and Peer Review
Backgrounder -
Overview
The Office of the Superintendent of Financial Institutions (OSFI) is making major changes to Guideline E-15 – Appointed Actuary: Legal Requirements, Qualifications and Peer Review. Guideline E-15 applies to more than 200 federally regulated life insurance companies and fraternal benefit societies and property and casualty insurance companies (collectively referred to as insurers).
OSFI is:
- removing all content from Guideline E-15 that unnecessarily repeats requirements that already exist in the Insurance Companies Act
- eliminating the requirement for peer review of an appointed actuary's work
Why it's important
Guideline E-15 describes the role of the appointed actuary and OSFI's expectation for that role to ensure the safety and soundness of insurers. Since its introduction in 2003, peer review played an important role in elevating and narrowing the range of actuarial practice related to the valuation of liabilities and financial condition testing. Currently, however, OSFI believes that this objective has been achieved, and going forward, the cost of peer review to the industry outweighs the prudential benefits received. With the changes to Guideline E-15, OSFI is taking deliberate steps towards easing regulatory burden, and this change is expected to result in significant savings for the industry.
It is important to note that OSFI is preserving the Superintendent's authority to request peer review when necessary.
By streamlining these requirements, OSFI maintains strong oversight of insurers while reducing unnecessary burden.
Implementation
The elimination of peer review of an appointed actuary's work will take effect on January 1, 2027. Peer reviews will continue to add value until then given the relatively recent implementation of International Financial Reporting Standard (IFRS) 17.