Federal financial regulators have issued a discussion paper concerning proposed changes to the capital rules for property & casualty insurers.

The Office of the Superintendent of Financial Institutions last week issued a paper regarding proposed changes to the capital rules that aim to ensure that they “accurately reflect the risks in the property and casualty insurance industry”.

Key recommendations under consideration in the paper include:
> removing the capital factor on balances due from OSFI registered affiliated reinsurers;
> initiating a proposed methodology to determine capital requirements for interest rate risk; and
> implementing a more robust foreign exchange risk capital requirement.

OSFI is seeking comments on the paper by January 14. After receiving the comments, it intends to prepare a revised draft guideline for further consultation in early spring 2011, and it expects to have the final guideline prepared by September 2011, to be implemented effective Jan.1, 2012.

IE