Federal regulator seeks feedback on guideline

Industry feedback is being sought on a draft guideline, aiming to reduce the time between initiating and signing reinsurance documents, issued by the Office of the Superintendent of Financial Institutions of Canada (OSFI).
The guideline gives companies a nine-month window in which to get agreements signed.
An OSFI review of reinsurance arrangements across the country brought to light the need for such a timeline, says a letter from Robert Hanna, acting assistant superintendent of the regulation sector.
“OSFI noted there is often a disparity in the length of time between the initiation of a reinsurance arrangement and formal execution by the parties of the agreement,” writes Hanna.
Coverage during this period is usually set out in a less formal document such as a cover note or letter of proposal.
“However, if an event were to occur within this period, the lack of certainty relating to coverage in the informal document could create risks for both the ceding and assuming companies.”
OSFI is calling for industry feedback on the draft by January 19, 2007.
On the date the guideline is finalized, the provisions of the guideline will apply to all new reinsurance arrangements, as well as to those reinsurance arrangements that have been initiated but not formally executed by the parties.