The Office of the Superintendent of Financial Institutions has published a set of principles that will guide the creation of a new capital adequacy framework for property & casualty insurers.

Last July, the Property and Casualty MCT Advisory Committee (P&C MAC) published for comment a set of high-level principles designed to direct the development of a new capital framework for the P&C industry. After incorporating the comments it received, and making some changes in response, the committee submitted them to OSFI and Quebec’s Autorité des marchés financiers for approval.

On Friday, OSFI announced that it has reviewed the principles and is endorsing them.

The principles, the committee explains, are intended to “encourage the use of improved risk-based business decisions and better reflect each insurer’s risk profile and risk management practices.”

They call for a capital framework that encourages good risk management and capital management and avoids procyclicality. They also establish principles concerning risk measurement, capital adequacy, risk monitoring and intervention.

OSFI notes that as the P&C committee completes its work, the regulator will continue to follow its normal public consultation and approval process before any changes are made to the framework.

IE

Key Principles for the Future Direction of the Canadian Regulatory Capital Framework for Property & Casualty Insurance.

http://www.osfi-http://www.osfi-bsif.gc.ca/app/DocRepository/1/eng/guidelines/capital/guidelines/CRCF_PCI_e.pdf