Peter Routledge participates in a fireside chat at the National Insurance Conference of Canada 2026

Check against delivery

Moderator:

You have been proponent of a federal solution for resolving systemic earthquake risk in the insurance sector. PACCIC's tabletop exercise clearly demonstrated the financial risk to regulators across the country and drove home the need for a solution. The federal government is there as well. Can you explain why you view such a solution as necessary and what OSFI's role in complementing such a solution might be?

Superintendent Peter Routledge:

• Earthquake is one of the most significant catastrophic risks facing Canada and has the potential to create impacts across the broader financial system, not just the insurance sector.
• We are aligned on the importance of establishing some form of pre-planned resolution regime in the event of an earthquake. OSFI has devoted significant expertise and resources to understanding earthquake risk and supporting discussions on potential solutions to strengthen financial system resilience.
• The recent tabletop exercise reinforced the importance of having a plan in place before a major event occurs. As I've said previously, the goal is not a "backstop" but some form of pre-planned resolution framework that can respond effectively if insurers become non-viable following a catastrophic earthquake.
• Our own high-level analysis reinforces why this issue extends beyond the P&C insurance sector and why a broader financial system perspective is needed.
• Decisions on any federal arrangement are for governments and Parliament. OSFI's role is to provide prudential expertise, risk analysis and supervisory insight so policymakers have a clear understanding of the potential financial system implications of a major earthquake.

Moderator:

The federal government has made competitiveness and economic growth key priorities and, in Budget 2025, committed to streamlining regulation, reducing regulatory burden, improving coordination among regulators, and unlocking more private capital to support investment. As Canada's prudential regulator, what role do you see OSFI playing in advancing that agenda while continuing to maintain strong prudential oversight and financial stability?

Superintendent Peter Routledge:

• I don't see prudential regulation and economic growth as being in conflict. Growth and competition are important considerations, but financial resilience remains our primary focus.
• We're already 2 years into the most significant modernization of our regulatory and supervisory framework in OSFI's history. The goal is to continue to make regulation clearer, more efficient, and more proportionate while maintaining strong prudential outcomes.
• A resilient financial system is a national advantage. It gives institutions the confidence to lend, invest, innovate, and support economic growth.
• A good example is our recent decision to lower the Domestic Stability Buffer, which gives banks greater flexibility to deploy capital while maintaining substantial loss-absorption capacity.
• Similarly, in insurance, we have reduced barriers to alternative sources of capital by allowing the use of insurance-linked securities, such as catastrophe bonds, for certain catastrophe risks. These changes help improve flexibility and access to capital while maintaining strong prudential outcomes. How that capacity is ultimately used remains a decision for boards and management teams.

Moderator:

In your speech to the Economic Club of Canada a few weeks ago, you spoke about re-evaluating OSFI's risk appetite against the new reality in which we live. Can you share your thinking on how your risk appetite will evolve and what my industry can expect to see?

Superintendent Peter Routledge:

• We're rebalancing our risk appetite. Financial system resilience remains our primary responsibility, but we're placing greater weight on growth and competition than we have in the past.
• That shift is already showing up in our decisions. We've adjusted risk weights and capital requirements in some areas, and we're continuing to look at where changes can support growth and competitive intensity without creating undue prudential risk.
• We also need more ideas. Many of the changes we're considering came directly from industry, and we'll continue listening to institutions that can identify practical ways to support growth and competition while maintaining resilience.
• More competition can create more innovation, but it can also mean more volatility. Healthy economies experience a degree of creative destruction, and a more dynamic financial system may mean accepting somewhat more disruption than Canadians have historically experienced.
• Our challenge is finding the right balance: avoiding what I've called the "stability of the graveyard" while preserving the resilience and confidence Canadians expect from their financial system.

Moderator:

As AI becomes more deeply embedded across the financial sector, how does OSFI balance fostering innovation and competitiveness with maintaining prudential oversight and financial stability?

Superintendent Peter Routledge:

• AI has enormous potential to improve productivity, services and risk management. Canadian financial institutions need to continue innovating if they want to remain competitive in a rapidly changing environment.
• Financial institutions remain responsible for the decisions they make, and strong governance, human oversight and risk management must keep pace with the technology.
• OSFI supports the Financial Stability Board's principles for the responsible adoption of AI, including strong governance, effective risk management, transparency and appropriate oversight to help safeguard financial stability.
• More broadly, OSFI is technology neutral. We focus on the risks associated with a product, service or activity, not the specific technology being used. That approach supports innovation and competition within a strong and resilient Canadian financial system.
• CCCS highly respected with expertise that can be very helpful to industry. Help industry find ways to use AI responsibly and safely.

Moderator:

Superintendent, you've got two years left of your seven-year term and I'm wondering if you have thought about your legacy and what you've achieved? Can you share how you're thinking about that, the OSFI you inherited compared to today, and what you hope to achieve in the next two years? And, adding to that, what should we all be thinking about beyond those two years – what are the risks you're most concerned about?

Superintendent Peter Routledge:

• I tend not to think in terms of personal legacy. My focus has been on ensuring OSFI and Canada's financial system are prepared for a more uncertain and fast-changing world.
• Over the past five years, we've significantly modernized our supervisory, policy, approvals and analytics capabilities so we're better equipped to adapt to changing financial and economic conditions while maintaining financial stability as our primary objective.
• Over the next two years, my priority is continuing to make OSFI more focused, agile and forward-looking, while maintaining the trust Canadians place in our financial system. That includes ensuring our regulatory framework remains effective and responsive to new risks and opportunities, reviewing whether aspects of that framework can be improved to support competition and growth without creating material stability risk, and continuing to make decisions based on evidence, prudential judgment and our mandate.
• Looking beyond that, the biggest risks are those that combine and reinforce one another: geopolitical uncertainty, security and national security risks, technology and cyber risks, climate-related events, and vulnerabilities that emerge outside traditional regulatory boundaries. The challenge for regulators will be maintaining resilience in a world where change happens faster and risks can spread more quickly across an increasingly interconnected system.

Moderator:

Over the last two years, we have seen a renewed interest in oil and gas expansion from the federal government and a shift in public opinion toward supporting more investment in things like pipelines. Much of this is due to the geopolitical situation and economic uncertainty, and the desire to invest more in the Canadian economy and build on one of our strengths which is our natural resources. The issue of climate change has received lots of attention over the past decade and OSFI's B-15 guideline was your foray into that issue and managing climate risks. Insurers now have to disclose "insured emissions" publicly, for example. However, in this current context where the pendulum has swung back toward investment in oil and gas capacity, do you see a risk of B-15 requirements creating barriers to new investment or products like insurance? How can industry, regulators, and government balance these competing priorities?

Superintendent Peter Routledge:

• Guideline B-15 is not designed to incentivize or disincentivize investment in any particular sector, asset class, or business activity. Its purpose is to strengthen risk management by helping institutions understand, assess, and manage climate-related financial risks.
• Guideline B-15 prompts institutions to measure their climate-related exposures as they evolve and understand where risks may be concentrated, helping them make better-informed decisions, strengthen resilience and manage climate-related risks and opportunities more effectively.
• Our focus is prudential, not policy driven. Capital allocation decisions belong to institutions. Our role is to ensure risks are understood, managed and reflected in decision-making.
• That is particularly important in today's environment. Canada is pursuing economic growth, energy security and infrastructure development while continuing to face both physical and transition risks associated with climate change.
• Ultimately, strong risk management and economic growth go hand in hand. When risks are properly understood and managed, institutions are better positioned to support investment, innovation, energy development and long-term economic growth.

Moderator:

IBC and the industry have been engaging with OSFI on the continued evolution of Canada's reinsurance framework as catastrophe risks become more frequent and severe. We welcomed OSFI's recent decision to recognize natural catastrophe bonds as an additional form of risk transfer. Looking ahead, how do you see Canada's prudential framework continuing to evolve to support the effective and practical use of both traditional and emerging forms of risk transfer, while maintaining strong prudential safeguards and ensuring Canada remains an internationally competitive jurisdiction for global reinsurance capacity and capital?

Superintendent Peter Routledge:

• Reinsurance remains a critical part of the resilience of Canada's insurance sector, particularly as catastrophe risks become more frequent and severe.
• The recognition of catastrophe bonds reflects a broader principle: prudential frameworks should evolve alongside markets and innovation, provided policyholder protection and sound risk management are maintained.
• Our focus is not on favouring one risk-transfer tool over another. It's on providing alternative to insurers, ensuring risk transfer is effective, transparent and genuinely transfers risk.
• Going forward, we will continue to adapt our framework as markets evolve, while maintaining the resilience and confidence that underpin a strong insurance sector.