24 Feb. 2005, Ottawa — “Over the last year, OSFI has exchanged views with the life insurance industry on the general direction future life insurance capital rules should take. In light of issues raised and new international regulatory developments, OSFI has prepared this consultative paper summarizing our findings and making a proposal for further work. ” Julie Dickson, Assistant Superintendent, Regulation Sector.
In 1999, following a two-year moratorium on changes, OSFI conducted an extensive review of the Minimum Continuing Capital and Surplus Requirements Guideline (MCCSR). The objective of the review was to determine if the MCCSR and the Test of the Adequacy of Assets and Margin Requirements (TAAM) Guidelines provided the flexibility needed to address emerging issues or whether it was necessary to undertake fundamental changes. OSFI and the industry concluded that there were no fundamental problems with the formula but agreed on a number of areas where changes were needed.
Several changes were implemented in 2001, 2 and 3. More initiatives are currently underway.
IN 2003, OSFI and CLHIA met and from that discussion and others, a number of reasons to look at the current rules were identified. In parallel, numerous international regulatory changes are being discussed and implemented.
Several recommendations conclude the consultative paper. These include initiatives underway which should be concluded, a number of considerations for future changes to MCCSR, and co-operation between OSFI and the life insurance industry for future developments of new or enhanced models.
The Consultative paper is available on the OSFI web site at http://www.osfi-bsif.gc.ca/app/DocRepository/1/eng/papers/osfi/MCCSR_ConsultPaper_Feb2005_e.pdf
For more information about OSFI, visit www.osfi-bsif.gc.ca