The Office of the Superintendent of Financial Institutions has published a guideline regarding external actuarial reviews for federally regulated insurers.

The regulator reports that it has been working with the Canadian Institute of Actuaries to establish an external review process for certain work produced by Appointed Actuaries of federally regulated insurance companies. A draft guideline was released for public comment in November 2002.

Now, the guideline has been modified to take account of comments received and to incorporate recent changes introduced by the CIA to its Consolidated Standards of Practice. OSFI says that the modifications have not materially changed the substance of the guideline.

The final guideline was released Friday. It describes OSFI’s expectations for these external reviews and outlines the responsibilities of the Appointed Actuary under the Insurance Companies Act and related OSFI guidance. It also reviews the minimum qualifications for the actuary.

OSFI explains that the purpose of external review is to narrow the range of actuarial practice and maintain and strengthen industry and public confidence in the work of the Appointed Actuary. “OSFI expects that external reviews will be conducted for actuarial valuations and financial condition reports and, in the case of life insurance companies, for actuarial opinions with respect to participating business and for actuarial oversight of MCCSR reports. Reviewers are expected to be external to the insurance company and, if the Appointed Actuary is a consultant, external to the actuary’s firm,” it notes.

Also, OSFI expects that all work subject to external review will be reviewed at least once every three years. To ensure a manageable workload for OSFI and for the available reviewers, the timing of the initial external reviews will be phased in, it says. OSFI will contact each company to establish the time by which the initial external review should be completed.