On June 8, 2018, the Office of the Superintendent of Financial
Institutions (OSFI) released its Discussion Paper on
OSFI's Reinsurance Framework, outlining a number of
proposed changes to the reinsurance regulatory framework. The
Discussion Paper follows a multi-year review by OSFI of reinsurance
practices, and addresses a number of concerns OSFI has identified.
This is the first comprehensive review of the reinsurance framework
in ten years, and proposes a number of significant changes.
The Discussion Paper highlights the increasing reliance by
federally regulated insurers (FRIs) on reinsurance. OSFI is
particularly concerned about the "leveraged business
model", which involves writing large policies in Canada, and
subsequently ceding a significant portion of these risks outside of
Canada, with little capital or vested assets maintained in Canada
to support the increased risk exposure. OSFI is also concerned
about risks associated with large exposures and
