OSFI publishes revised guidelines on reinsurance practices

These revised guidelines reflect changes in industry practices over the past 10 years and come into effect on January 1, 2025.

The revised Guideline B-3 sets out OSFI’s expectations for federally regulated insurers (FRIs) to better identify and manage risks arising from the use of reinsurance, particularly counterparty risk.

The revised Guideline B-2 will require property and casualty FRIs to be able to cover the maximum loss related to a single insurance exposure on any policy it issues, assuming the default of its largest unregistered reinsurer on that exposure.

Federally regulated insurers’ existing insurance business should continue to comply with the Guideline B-3 and Guideline B-2 currently in force until January 1, 2025. This nearly three-year transition period permits FRIs time to effectively adjust their business practices to comply with the new guidelines before they come into force.

OSFI will hold industry information sessions in the coming months to provide additional clarity regarding OSFI's expectations and supervisory approach.

OSFI’s suite of regulatory and prudential tools must continuously evolve to keep pace with industry practices. The refinements to Guidelines B-3 and B-2 do just that, and will help ensure that federally regulated insurance providers continue to have the necessary resources to meet their commitments to policyholders.

- Ben Gully, Assistant Superintendent, Regulation