Amending an order to insure in Canada risks to add or delete a class of insurance (foreign company)

Information Requirements

A. For the addition of a class of insurance, the applicant is generally expected to provide:

1. a description of the type of risk it wishes to insure, the class of insurance it wishes to add to its order, and the type of policy it wishes to underwrite;

2. if the applicant is currently underwriting elsewhere the type of risk that it wishes to insure in Canada:

   1. the name of the country in which the applicant underwrites this type of risk,

   2. a confirmation that the applicant is authorized, under the laws of the country where it is incorporated, to insure risks within the class of insurance the applicant wishes to add to its order (e.g., certified copy of its constating documents or licence, or acknowledgement from the home jurisdiction’s regulatory authority that the applicant is authorized to insure these risks), and

   3. an indication of its experience (e.g., length of time, premium volume, loss ratio);

3. the reasons why the applicant believes it will be successful in underwriting the risks under the new class of insurance;

4. a description of how the applicant will underwrite, sell, administer and service the new class of insurance, including:

   1. an analysis of the proposed target market and competitors, showing both threats and opportunities and plans to address them, and

   2. a description of the proposed distribution channel;

5. a three-year analysis of the effect the new class of insurance will have on the financial condition and risk profile of the applicant’s branch in Canada, including:

   1. financial information regarding the new class of insurance, including relevant assumptions relating to the pricing and underwriting of policies, expected claims, premium income, expenses, actuarial liabilities, related investment income, and persistency of policies,

   2. a comparative pro forma balance sheet and assumptions,

      1. as at or about the date of the application, and

      2. for each of the next three financial year-ends; and

   3. the branch’s compliance with the assets in Canada requirement, reflecting relevant assumptions and, in the case of:

      1. a life insurance branch, a breakdown of all elements used to calculate the Test of Adequacy of Assets in Canada Margin Requirements and the vested assets in Canada requirements as set out in the Minimum Continuing Capital and Surplus Requirements Guideline, or

      2. a property and casualty insurance branch, details of the Branch Adequacy of Assets Test;

6. an overview of the risk management and control processes for the new class of insurance, including those related to:

   1. product design and pricing management,

   2. underwriting and liability management, and

   3. reinsurance arrangements and risks retention levels (refer to OSFI’s Reinsurance (Foreign Companies) Regulations and OSFI Guideline B-3, Unregistered Reinsurance, as applicable; and

7. a confirmation that all relevant provincial insurance regulators have been notified.

B. For the deletion of a class of insurance, the applicant is generally expected to provide:

1. a letter signed by the chief agent stating that the foreign company has discharged, or provided for the discharge of, unearned premiums, unpaid claims and any outstanding liabilities in respect of policies in Canada underwritten under the class of insurance to be deleted, including a description of the manner in which it has obtained the surrender of the outstanding policies in Canada, or discharged, or provided for the discharge of, all of its liabilities under these policies; and

2. a confirmation that all relevant provincial insurance regulators have been notified.

Administrative Guidance

1. When assessing an application pursuant to the legislative authorities, OSFI will generally:

   1. for the addition of a class of insurance:

      1. take into account the impact of the addition of the class of insurance on the applicant’s liability mix, assets in Canada, income, and risk profile to ensure that the overall solvency of the branch will not be unduly threatened; and

      2. ensure that the applicant has adequate and appropriate risk management policies and practices in place to manage the new class of insurance in Canada;

   2. for the deletion of a class of insurance, satisfy itself that the applicant has discharged, or provided for the discharge of, all of its policy liabilities in respect of the risks in Canada insured under the class of insurance to be deleted.