OSFI Releases Draft Revised Guideline B-3 On Reinsurance Practices And Procedures

On June 12, 2019, Canada’s federal prudential regulator of insurance companies, the Office of the Superintendent of Financial Institutions (“OSFI”), released a draft revised version of its principal guidance on managing reinsurance risk, Guideline B-3: Sound Reinsurance Practices and Procedures (the “Guideline”). The proposed revisions to the Guideline reflect the positions outlined in OSFI’s June 2018 Discussion Paper (see our commentary) as well as comments received from industry stakeholders (summarized, with OSFI’s responses, here).

At a high level, the revisions to the Guideline:

• Encourage insurers to better identify and manage risks arising from the use of reinsurance, particularly counterparty risk;