Consultation on the Updated Guideline E-16 – Participating Account Management and Disclosure to Participating Policyholders and Adjustable Policyholders

Document Properties

  • Type of Publication: Letter
  • Date: June 30, 2022
  • To: Federally Regulated Canadian Incorporated Life Insurance CompaniesFootnote 1

Guideline E-16 (“E-16” or “the Guideline”), Participating Account Management and Disclosure to Participating Policyholders and Adjustable Policyholders outlines OSFI’s expectations regarding the implementation of the requirements found in the Insurance Companies Act (ICA) and the Policyholders Disclosure Regulations (Regulations). E-16 became effective in November 2011. A recent Comparative Study by OSFI of insurers’ practices relating to participating accounts, along with findings from supervisory reviews, indicated that companies have varying interpretations of several areas of E-16 and the Regulations. As a result, OSFI has updated E-16 to address the issues identified.

The updates to the Guideline are intended to provide:

  • additional clarification of OSFI’s expectations, to aid companies in their interpretation of the ICA and the Regulations, and to facilitate greater consistency of practices by companies in satisfying the requirements of the ICA and the Regulations;
  • additional guidance on the disclosure requirements of the Regulations, to promote greater transparency and consistency of policyholder disclosures.

While the Guideline has been updated on aspects pertaining to participating policies, there were no changes specific to adjustable policies. No fundamental changes were required as relates to IFRS 17 but IFRS 4 legacy wording was updated where required.

OSFI invites comments on the updated Guideline E-16, particularly in response to the following questions:

  • Question 1: Do you agree the updated E-16 taken as a whole provides greater clarity as to how the requirements of the ICA and Regulations should be interpreted? If not, please identify areas where additional clarity is needed.
  • Question 2: Do you agree that the additional guidance on policyholder disclosures promotes greater consistency amongst companies? If not, what would you recommend and why?
  • Question 3: Do you agree that the udpated wording provides more clarity on OSFI’s expectations? If not, what would you recommend and why?
  • Question 4: Are there any areas for which more guidance is needed? If yes, please identify those areas and indicate the nature of the additional guidance that is required.
  • Question 5: For the areas specific to adjustable policies, are there any updates needed? If yes, please identify those areas and indicate the updates you would recommend.

OSFI is seeking feedback on a confidential basis through a 90-day public consultation, on the updated Guideline E-16. The public consultation will run from today through to September 28, 2022.

The updated Guideline E-16 can be viewed on OSFI’s Web site at www.osfi-bsif.gc.ca under Table of Guidelines.

Please provide feedback/comments via the comments template no later than September 28, 2022.

Questions and comments concerning the updated Guideline E-16 should be addressed to: Emily Zhang, Senior Actuary, Actuarial Division at emily.zhang@osfi-bsif.gc.ca before September 28, 2022.

Sincerely,

Chris Townsend
Senior Director, Actuarial Division
Supervision Sector

Footnotes

Footnote 1

The participating and adjustable policies requirements referred to in the ICA apply to Canadian incorporated life insurance companies, including any foreign branch operations outside of Canada. The participating and adjustable policies requirements of the ICA do not apply to a foreign subsidiary of a Canadian insurance company or to the Canadian branch business of a foreign insurance company.

Return to footnote 1