Office of the Superintendent of Financial Institutions
International Financial Reporting Standard 17 –
Insurance Contracts (IFRS 17) will become effective on January 1, 2023, replacing its predecessor IFRS 4. In support of a robust implementation of IFRS 17 by insurers, the Office of the Superintendent of Financial Institutions (OSFI) is working with the industry and other relevant stakeholders to revise its existing capital frameworks for the new accounting standard.
September 30, 2020 letter on the LICAT, MCT, MICAT review for IFRS 17, OSFI communicated its adjusted project plan and related consultation timelines. To revise the draft insurance capital guidelines for IFRS 17, OSFI is working with the insurance industries through a consultative process, including quantitative assessments. The draft guidelines released for consultation today help collect stakeholder comments and refine the capital expectations that institutions will be expected to meet upon implementation of IFRS 17.
Consistent with past communications with respect to LICAT and MCT, and to the extent possible, OSFI intends to maintain capital frameworks consistent with current capital policies and minimizing potential industry-wide capital impacts. We are also launching an industry-focused Quantitative Impact Study (QIS), the results of which will help inform whether any final calibration, phase-in or transitional adjustments are required.
On June 22, OSFI will be hosting a briefing session for all sectors to share information about this public consultation process and to answer any questions. We will also hold information sessions for insurers during the consultation period. These sessions provide insurers an opportunity to ask further questions to refine their understanding and input into the process, including completion of the Quantitative Impact Study. These information sessions will take place during the weeks of July 12 and August 23.
Please register here for the all-sector briefing taking place on June 22. Invitations to the summer information sessions will be sent directly to insurers.
Explanation of specific changes to each guideline, as well as how to make a submission, can be found in individual cover letters for each guideline.
Following the consultation and considering all input received, OSFI will issue the final guidelines along with a summary of comments received and OSFI’s responses.
Sincerely, Ben Gully Assistant Superintendent Regulation Sector
Draft insurance capital guidelines means the
Life Insurance Capital Adequacy Test (LICAT),
Minimum Capital Test (MCT) and
Mortgage Insurer Capital Adequacy Test (MICAT).
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For purposes of this document, federally regulated insurers include Canadian branches of foreign life companies, fraternal benefit societies, regulated life insurance holding companies, non-operating life insurance companies, federally regulated property and casualty insurers including Canadian branches of foreign P&C companies, and mortgage insurers.
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