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

    EBA Issues Erratum for Phase 2 Package of Reporting Framework 3.0

    EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.

    April 08, 2021 WebPage Regulatory News
    News

    EBA Updates Lists of Entities for Use in Capital Calculations under SA

    EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.

    April 08, 2021 WebPage Regulatory News
    News

    MAS Amends Notice on Related Party Transactions of Banks

    MAS amended Notice 643A that addresses requirements for banks to prepare statements of exposures and credit facilities to related concerns or parties.

    April 08, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Euro Short-Term Rate

    ECB has published, in the Official Journal of the European Union, the Guideline 2021/565 on the euro short-term rate (€STR) and this guideline amends the previous ECB Guideline 2019/1265.

    April 07, 2021 WebPage Regulatory News
    News

    EBA Consults on Standards Related to FRTB-SA

    EBA launched a consultation on the draft regulatory technical standards on the list of countries with an advanced economy for calculating the equity risk under the alternative standardized approach (FRTB-SA).

    April 07, 2021 WebPage Regulatory News
    News

    PRA Proposes Rules Related to IRB Approach for Credit Risk

    PRA is proposing, via CP7/21, the approach to implementing new requirements related to the specification of the nature, severity, and duration of an economic downturn in the internal ratings-based (IRB) approach to credit risk.

    April 07, 2021 WebPage Regulatory News
    News

    BoE Outlines Regulatory Treatment of Recovery Loan Scheme of UK

    The UK government launched the Recovery Loan Scheme (RLS) as part of its continued COVID-19 support for UK businesses, as announced by HM Treasury on March 03, 2021.

    April 06, 2021 WebPage Regulatory News
    News

    FSB Addresses G20 on COVID Measures, TBTF Reforms, and Climate Risks

    FSB published a letter, from its Chair Randal K. Quarles, to the G20 Finance Ministers and Central Bank Governors, ahead of their virtual meeting on April 07, 2021.

    April 06, 2021 WebPage Regulatory News
    News

    OSFI Unwinds Temporary Increase to Covered Bond Limit for Banks

    OSFI issued a letter to the deposit-taking institutions issuing covered bonds and announced the unwinding of the temporary increase to the covered bond limit for deposit-taking institutions, effective immediately.

    April 06, 2021 WebPage Regulatory News
    News

    EU Amends CRR and Securitization Regulation in Response to Pandemic

    To support recovery from the COVID-19 crisis, EU has published two regulations to amend the securitization framework, as set out in the Securitization Regulation (2017/2402) and the Capital Requirements Regulation or CRR (575/2013).

    April 06, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6826