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ARTICLE · 07 DECEMBER 2020

OSFI Releases Draft Guideline B-2 And Revises Rule For Large Insurance Exposures

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On November 26, 2020, the Office of the Superintendent of Financial Institutions Canada (OSFI) issued its draft Guideline B-2: Property and Casualty Large Insurance Exposures and Investment...

CanadaInsurance
Katie-May O'Donnell
Katie-May O'Donnell
Laurie LaPalme
Laurie LaPalme
Gordon Goodman
Gordon Goodman
Derek W. Levinsky
Derek W. Levinsky
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On November 26, 2020, the Office of the Superintendent of Financial Institutions Canada (OSFI) issued its draft Guideline B-2: Property and Casualty Large Insurance Exposures and Investment Concentration (Guideline B-2). In OSFI's Reinsurance Discussion Paper released in June 2018 (the Discussion Paper), OSFI advised that it would introduce a rule in Guideline B-2 to limit the size of policies provided by Property and Casualty (P&C) Federally Regulated Insurers (FRIs) in certain circumstances (the Rule). The Rule would restrict the maximum policy limit that a P&C FRI could issue, depending upon its capital level and excess collateral, as well as the diversity of its reinsurance counterparties and would cause the FRI to meet certain stress testing scenarios. OSFI advised that the proposed Rule would apply to P&C FRIs that provide coverage directly to policyholders and to P&C FRI reinsurers in respect of direct business assumed by registered affiliates.

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