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Canada’s federal financial regulator has rejected proposed global capital requirements for insurers, declaring that they are too high for the Canadian market.

In a statement issued Thursday, the Office of the Superintendent of Financial Institutions (OSFI) said it doesn’t support adopting the proposed global capital standard, known as the Insurance Capital Standard (ICS), for the Canadian industry.

Specifically, OSFI says the standard would impose capital requirements for long-term products that are “too high to be compatible with OSFI’s mandate of allowing Canadian insurers to compete and take reasonable risks.”

OSFI’s rejection of the proposed global standard comes in the wake of an announcement from the International Association of Insurance Supervisors (IAIS) that it will launch a five-year monitoring period for the ICS starting in January 2020.

Data collected during the monitoring period will be used to craft the final capital requirements.

The IAIS said the proposed standard was developed through six quantitative field testing exercises from 2014 to 2019, coupled with consultation and discussion among regulators and other stakeholders.

OSFI said that it’s broadly supportive of the goals of developing global standards. During the IAIS monitoring period OSFI “will continue its work in trying to achieve an international capital standard for insurance companies that works for all jurisdictions,” it said.

In the meantime, Canadian insurers will continue to be subject to OSFI’s existing capital rules for federally regulated insurance companies.

Alongside its announcement on capital standards, the IAIS also said it has adopted a set of reforms to enable effective cross-border supervision in the sector and will implement a new framework for assessing and mitigating systemic risk in the insurance sector, starting in 2020.

In response to the planned introduction of the systemic risk framework, the Financial Stability Board (FSB) said it’s suspending the effort to identify global systemically important insurers (G-SIIs). It plans to revisit the concept of identifying G-SIIs in November 2022.