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

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News
    News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News
    News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News
    News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News
    News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News
    News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News
    News

    DNB Publishes Multiple Reporting Updates for Banks

    DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.

    February 28, 2023 WebPage Regulatory News
    News

    NBB Sets Out Climate Risk Expectations, Issues Reporting Updates

    The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting

    February 24, 2023 WebPage Regulatory News
    News

    EBA Updates Address Securitization Standards and DGS Guidelines

    The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.

    February 21, 2023 WebPage Regulatory News
    News

    FSB Publishes Letter to G20, Sets Out Work Priorities for 2023

    The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023

    February 20, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8793