OSFI released a discussion paper as part of its review of the reinsurance framework that is applicable to federally regulated insurers. The discussion paper outlines a number of proposals designed to enhance the and maintain effective reinsurance framework. Comments are due by September 15, 2018.
Key proposals in the discussion paper aim to address risks associated with large exposures and concentration, particularly for direct writers of P&C insurance. The discussion paper:
- Includes proposal on enhancements to the OSFI guidance on sound reinsurance practices and procedures.
- Proposes changes to the administration of the statutory requirement to obtain the Superintendent's approval to reinsure with an unregistered reinsurer.
- References reinsurance-related amendments that will be made to the next draft Minimum Capital Test (MCT) guideline for federally regulated P&C insurers. The draft revised MCT guideline will be released for comment in the coming weeks.
Adjustments to the capital framework for property and casualty (P&C) insurers are also being considered. OSFI recognizes reinsurance as an important risk management tool. Reinsurance can expose insurers to operational risks, among others.
Comment Due Date: September 15, 2018
Keywords: Americas, Canada, Insurance, Reinsurance Framework, Property and Casualty Insurance, Large Exposures, Concentration Risk, OSFI
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