Although it has voiced its approval of the goals of the Insurance Capital Standard (ICS), the Office of the Superintendent of Financial Institutions (OSFI) does not support the ICS design recently proposed by the International Association of Insurance Supervisors (IAIS).
The IAIS recently held an Executive Committee Meeting in Abu Dhabi, UAE, where members proposed a five-year monitoring period for the ICS version 2.0 testing phase. The ICS is a common capital standard for large internationally active insurance groups.
The OSFI published a statement saying that the standard in its current form is “not fit for purpose for the Canadian market.” In particular, the OSFI stated that the proposed capital requirements for long-term products are too high to be compatible with the agency’s mandate of allowing insurers to compete and take reasonable risks.
Within the five-year period, OSFI will continue its work to achieve an international capital standard for insurance companies which works for all jurisdictions.
