July 25, 2011 by Canadian Underwriter
The Office of the Superintendent of Financial Institutions (OSFI) is requesting comment from industry stakeholders on its vision paper for new principle-based solvency framework for Canadian property and casualty insurers by Oct. 15, 2011.
OSFI’s Property and Casualty Minimum Capital Test Advisory Committee (P&C MAC) published its Key Principles for the Future Direction of the Canadian Regulatory Capital Framework for Property and Casualty Insurance on OSFI’s Web site.
The paper calls for regulatory asset requirements to be calculated on two bases – a Target Asset Requirement (TAR) and the Minimum Asset Requirement (MAR).
All insurers would use a standard approach, a factor- or formula-based approach, to calculate MAR. But for calculating TAR, insurers can opt for the more sophisticated internal model approach, OSFI said in an accompanying letter.
A definitive timetable has yet to be approved, but the implementation of the new solvency framework should be done gradually, starting with the measure for insurance risk for regulatory capital purposes. This is expected by 2014-15.
The development of models to measure the other risks will follow, OSFI said.
Questions may be directed to Judith Roberge at 613-990-4412 or via email at Judith.roberge@osfi-bsif.gc.ca.
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