Cambridge, Ontario, Thursday, November 12, 2009 — Tonight I thought I would talk about the life insurance industry and how we are viewing it in light of the global financial crisis.
The October issue of Global Risk Regulator noted that the life insurance industry fears that insurers could be, “dragged into a net of regulations designed for the banks at the heart of crisis when it�s clear that insurance firms do not present a systemic risk on anything like the scale that banks do.�
This creates the impression that insurance companies might be subject to some unfair regulation simply because some global banks made big mistakes.
However, I think the lessons of the financial turmoil apply equally to all financial institutions. And I believe that insurers should be watching what is being talked about in the banking industry, and bankers should be watching what is being discussed in the insurance industry.
We at OSFI have both banks and insurance companies in mind when we participate in international discussions, and as we consider changes to our approach and requirements. If we see weaknesses in an industry � regardless of whether or not these weaknesses have led to losses � we try to address them across all sectors.
There are changes in the regulatory wind, not only in the insurance industry, but changes in the banking sector. These will definitely have an impact on the insurance world, so it would be wise to know where things are headed in the banking sector.
And as I have noted in the past, it is also wise for regulators to keep in mind that as they seek to improve the safety and soundness of the institutions they regulate, they should keep an eye on potential unintended consequences and the overall impact of their proposed changes on the industry.
For complete remarks, go here
OSFI is an independent agency of the Government of Canada. It reports to the Minister of Finance. For more information visit www.osfi-bsif.gc.ca.