The Office of the Superintendent of Financial Institutions is rescinding practice standards that applied to life insurance companies.

OSFI announced today that its Standards of Sound Business and Financial Practices and the Program for Assessment of Regulatory Compliance (PARC), are being rescinded.

The regulator says that it believes that the Standards and PARC have greatly assisted life insurers in developing and enhancing their practices and notes that many companies now operate well beyond these minimum requirements.

In addition, a number of events have occurred since the Standards were initially released that make them obsolete, it notes, including:

  • implementation of the Supervisory Framework, which focuses on risk management and control functions, and addresses many of the issues covered by the Standards;
  • the issuance of new or updated guidelines dealing with corporate governance, source of earnings disclosure, outsourcing, the role of the independent actuary, and external review, etc.;
  • trade associations such as the CIA have strengthened guidance issued to members;
  • a general desire amongst the regulatory and investment communities for companies to demonstrate improved risk management, reserving, governance, disclosure, etc.; and
  • the “embedding” of the Standards by many companies into their risk management frameworks.

Given these various events, OSFI says it believes it is appropriate that the formal Standards and the associated PARC self-assessment be rescinded. This initiative, which is effective immediately, is also in line with the recent removal of the Canada Deposit Insurance Corporation’s Standards of Sound Business and Financial Practices for deposit taking institutions, it adds.

“The removal of the Life Standards and PARC does not eliminate the need for companies to continue developing and enhancing their business and financial practices,” OSFI notes. It says that it expects that companies will continue incorporating the general concepts found in the Standards, or in other contemporary risk measures, into their risk management frameworks. And, it will continue to review the appropriateness of practices at companies and societies, as provided for in its Supervisory Framework.