The Financial Services Commission of Ontario is seeking comment on its efforts to develop recommendations for the adoption of a “prudent portfolio” model for insurance company investment and lending.

The commission is also seeking input on the updating of corporate governance and related party rules for insurance companies.

FSCO says that its approach would be consistent with that of other Canadian financial services regulators. In Ontario, the aim is to harmonize, to the greatest extent possible, with the federal insurance legislation.

In anticipation of the prudent portfolio regime and as an interim measure, FSCO has introduced, by way of a recent Budget Bill, provisions to expand the investment powers of Ontario insurers.

Specifically, amendments to the Insurance Act have added mutual and pooled funds to the list of permissible investments and removed income-related restrictions on preferred and common shares.

These amendments refer to guidelines to be issued by FSCO with which insurers would need to comply when making such investments.

A draft of the guidelines pursuant to this new provision is now ready. FSCO is seeking comment on he guidelines by October 26.