Featured Product

    OSFI Updates Timelines for Implementation of IFRS 17

    September 30, 2020

    OSFI updated the timelines for implementation of IFRS 17 on insurance contracts. OSFI updated two accounting advisories on IFRS 17 and IFRS 9 to revise key milestones and reporting requirements for Canadian insurers to reflect the IASB deferral of IFRS 17 to January 01, 2023. The advisories align expectations of OSFI with the timelines set for implementation of IFRS accounting standards. The IFRS 9 advisory explains that OSFI expects life insurers to defer the application of IFRS 9 until the expected effective date of the IFRS 17 standard on January 01, 2023. Additionally, OSFI revised a previous industry letter to provide life, property and casualty, and mortgage insurers with new timeframes for adjustment of their capital tests.

    The industry letter updates the timelines to revise the existing capital guidance for insurers, namely Guidelines A: Life Insurance Capital Adequacy Test (LICAT), Minimum Capital Test (MCT), and Mortgage Insurer Capital Adequacy Test (MICAT). For life insurers with segregated fund guarantee (SFG) business, development work on the new standard approach for determining associated capital requirements has been following a separate project plan. Additional details related to the plan will be communicated later this year. OSFI will continue its capital policy development process, including quantitative assessments, to implement IFRS 17 in a robust and timely way in its insurance capital guidelines. The remaining key milestones include:

    • In September/October 2020, OSFI will distribute directly to insurers and select stakeholders for comment revised draft LICAT/MCT/MICAT 2023 guidelines, Quantitative Impact Study (QIS) #2 for LICAT and MCT focused on select capital impact drivers, and LICAT sensitivity test.
    • OSFI plans to publish the revised draft LICAT/MCT/MICAT 2023 guidelines, draft regulatory capital forms, and QIS #3 and sensitivity tests in June 2021.
    • From November 2021 to March 2022, potential directed consultations and data calls for calibration and transition purposes have been planned.
    • OSFI plans to publish final LICAT/MCT/MICAT 2023 guidelines and final regulatory capital forms in August 2022.

    Regarding the early adoption of IFRS 17, the accounting advisory on IFRS 17 highlights that OSFI has determined that federally regulated insurers should not adopt IFRS 17 before its effective date of January 01, 2023. Disallowing adoption before January 01, 2023 implies that federally regulated insurers that are subsidiaries of deposit-taking institutions with an October 31 year-end will adopt IFRS 17 for annual periods beginning November 01, 2023. OSFI confirms this adoption date, having considered the complexity of implementing IFRS 17 and the size of these deposit-taking institution subsidiaries relative to the regulated deposit-taking institution. Thus, the deposit-taking institution subsidiaries with a December 31 year-end will adopt IFRS 17 on January 01, 2023.

    The advisory also states that federally regulated insurers are expected to submit semi-annual progress reports to OSFI on their implementation of IFRS 17. The reports will detail the status of the project and any material decisions made. Federally regulated insurers should submit progress reports semi-annually on or before September 30, 2020; March 31, 2021; September 30, 2021; March 31, 2022; September 30, 2022; and March 31, 2023. Federally regulated insurers that are subsidiaries of deposit-taking institutions are expected to submit a final progress report no later than September 30, 2023.

     

    Related Links

    Keywords: Americas, Canada, Insurance, IFRS 17, IFRS 9, Insurance Contracts, Financial Instruments, LICAT, MICAT, MCT, Regulatory Capital, Reporting, Implementation Timeline, OSFI

    Featured Experts
    Related Articles
    News

    APRA Sets LAC for D-SIBs, Proposes to Enhance Crisis Preparedness

    APRA issued a letter on the loss-absorbing capacity (LAC) requirements for domestic systemically important banks (D-SIBs) and published a discussion paper, along with the proposed the prudential standards on financial contingency planning (CPS 190) and resolution planning (CPS 900).

    December 02, 2021 WebPage Regulatory News
    News

    EC to Review Macro-Prudential Rules while ESRB Assesses Policy Stance

    The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).

    December 01, 2021 WebPage Regulatory News
    News

    FSB Sets Out Good Practices for Crisis Management Groups

    The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups.

    November 30, 2021 WebPage Regulatory News
    News

    APRA Penalizes Heritage Bank for Incorrect Reporting of Capital

    The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Releases Annual Report 2021-2022

    The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Updates Timeline for Implementation of Certain Basel Rules

    Through a letter addressed to the banking sector entities, the Office of the Superintendent of Financial Institutions (OSFI) announced deferral of the domestic implementation of the final Basel III reforms from the first to the second quarter of 2023.

    November 29, 2021 WebPage Regulatory News
    News

    EC Defers Adoption of Regulatory Standards for Disclosures Under SFDR

    EIOPA recently published a letter in which EC is informing the European Parliament and Council that it could not adopt the set of draft regulatory technical standards for disclosures under the Sustainable Finance Disclosure Regulation (SFDR) within the stipulated three-month period, given their length and technical detail.

    November 29, 2021 WebPage Regulatory News
    News

    FCA Releases MIFIDPRU Application Forms and Third Set of Rules on IFPR

    The Financial Conduct Authority (FCA) published the third in a series of policy statements that set out rules to introduce the UK Investment Firm Prudential Regime (IFPR), which will take effect on January 01, 2022.

    November 29, 2021 WebPage Regulatory News
    News

    APRA Finalizes Capital Adequacy Standards for Banks

    The Australian Prudential Regulation Authority (APRA) published, along with a summary of its response to the consultation feedback, an information paper that summarizes the finalized capital framework that is in line with the internationally agreed Basel III requirements for banks.

    November 29, 2021 WebPage Regulatory News
    News

    CPMI-IOSCO Seek Comments on Access to Central Clearing and Portability

    The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a consultative report focusing on access to central counterparty (CCP) clearing and client-position portability.

    November 29, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7751