BC’s regulator adopts three-year interval for capital adequacy tests

British Columbia’s Financial Institutions Commission (FICOM) requires provincially incorporated insurers to conduct dynamic capital adequacy tests (DCAT) in no more than three-year intervals.
The Office of the Superintendent of Insurance (OSFI), on the other hand, requires federally regulated insurers to prepare a DCAT annually under its Guideline E-18.
“It is FICOM’s expectation that the frequency of preparation be determined by the provincial insurer’s board of directors in close consultation with its senior management and appointed actuary,” the FICOM bulletin says.
“The frequency should be no more than three year intervals (i.e. annually, bi-annually or tri-annually) and should take into account the insurer’s overall risk profile.”
In addition, FICOM will assess an insurer’s established board policies and procedures including, but not limited to:
• frequency and timing of an insurer’s DCAT preparation and reporting;
• requirements for interim DCAT preparation and reporting;
• requirements for DCAT integration into the insurer’s risk management and capital management; and
• frequency and timing for reviewing DCAT scenarios.