Canada’s federal insurance regulator has published a discussion paper proposing changes to the capital adequacy regime for property & casualty (P&C) insurance companies.
The Office of the Superintendent of Financial Institutions (OSFI) published a discussion paper Friday setting out proposed changes to the capital regime for federally regulated P&C insurers, seeking the industry’s input.
Additionally, it is requesting that firms participate in a quantitative impact study that will enable insurers to estimate the impact from the proposed changes on their individual companies.
The paper proposes changes to the definitions of capital; revisions to better capture various forms of risk, including insurance risk, credit risk, market risk, operational risk, and off-balance sheet exposures; and, it proposes a diversification credit. It does not deal with changes that are being contemplated concerning the measurement of earthquake risk exposure, which is being handled through a separate process.
OSFI says that it will use the results of the quantitative impact study, and the comments received on the discussion paper, as well as the comments received on the earthquake discussions, when it prepares the draft capital guideline. It says it’s aiming to issue the draft guideline for consultation before the end of 2013, with a final version expected to be released in the summer of 2014. It’s targeting implementation on January 1, 2015.
Responses to both the study and the discussion paper are due by July 31.