OSFI Releases New Minimum Capital Test Guideline

The Office of the Superintendent of Financial Institutions has released a revised Minimum Capital Test Guideline for property and casualty insurers, slated to come into force in January.

OSFI says the purpose of the revision was to create a more robust risk-based capital framework that better aligns capital requirements to the risks P&C insurers face.

The guideline introduces new and updated risk factors and margins plus a revised definition of available capital.

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OSFI deputy superintendent Mark Zelmber says the guideline “would not have been possible without the industry’s significant cooperation over the past few years.”

The regulator also says the industry is “well positioned to implement the Guideline, which provides for a three-year phase-in period.”

The new risk-based framework results in a 2.8-point decline in the capital ratio, on average, across the industry. OSFI says the decline’s impact “may vary by company, as the new framework better aligns each insurer’s capital requirements with its risk profile.”

This story was originally published by Canadian Insurance Top Broker.