The Office of the Superintendent of Financial Institutions (OSFI) has positioned itself against the way the International Association of Insurance Supervisors (IAIS) wants to implement its proposed International Capital Standard.
The OSFI took its position at the Executive Committee meeting of the IAIS held on Nov. 13 in Abu Dhabi, United Arab Emirates. It says it does not support the proposed common capital standard for large internationally active insurers because, in its current form, the standard is not suited to the Canadian market.
Incompatible with long-term risk
In particular, the OSFI says the proposed capital standard is not suited to long-term insurance products, such as permanent life insurance. “Specifically, the proposed capital requirements for long-term products are too high to be compatible with OFSI’s mandate of allowing Canadian insurers to compete and take reasonable risks,” says the OSFI.
Five years to adjust
During a five-year monitoring period, the OSFI says it intends to continue its efforts to achieve an international capital standard that works for all jurisdictions.
In the meantime, federally regulated insurers in Canada will continue to comply with the requirements of OFSI’s capital framework, which the OSFI describes as robust.
