OSFI Updates Timelines for Implementation of IFRS 17
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
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Masha Muzyka
CECL, IFRS 9, and IFRS 17 expert; credit risk and insurance risk specialist; strategic planning and credit analytics solutions consultant
Previous Article
IFRS Consults on Global Approach to Sustainability ReportingRelated Articles
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
FSB Reports Assess NBFI Sector and Progress on LIBOR Transition
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.
