What’s New: In Brief (March 31, 2008)

The Office of the Superintendent of Financial Institutions Canada (OSFI) has adjusted its Minimum Capital Test (MCT) Guideline for all federally regulated property and casualty insurance companies.
After discussions with the Insurance Bureau of Canada, OSFI and the Canadian Council of Insurance Regulators have now revised the treatment of property and casualty insurers’ “other subsidiaries and affiliates” for capital purposes, says an OSFI release.
“The change will permit a consolidation-like treatment for p&c insurers’ investment subsidiaries approved by OSFI using a look-through approach to underlying assets,” the release says.

A recent European case illustrates how a marine surveyor can be held liable for substantial damages even when properly performing his contractual duties, reports the International Transport Intermediaries Club Ltd (ITIC).
In its latest Claims Review, ITIC reports on a dispute involving one of its surveyor members who was appointed by a bank to confirm the value of a vessel under construction and to certify that additional funds could be drawn down during the construction period.
The bank confirmed the role of the surveyor was not to monitor the standard or quality control of the ship’s construction, nor its conformity with design. But when defects were found in the ship after construction, the owners sued the shipbuilder, the surveyor attending to the quality control of the build, and also ITIC’s member who was only acting on behalf of the bank the ITIC reports.
Legal proceedings against all the parties took two and a half years to conclude. In order to finalize this matter, ITIC agreed to contribute EUR35,000 (about Cdn$56,700) towards the total settlement of more than EUR300,000 (approx. Cdn$486,100) negotiated at mediation. A further Euros 30,000 (approx. Cdn$48,618) was incurred in legal costs.