Canada: Financial Sector Assessment Program-Technical Note-Insurance Sector: Regulation and Supervision
IMF Staff Country Reports, January 24, 2020
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Bibliographic details
- Published: January 24, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513527208.002
Overview
- Reviews the insurance sector’s regulation and supervision in Canada.
- Highlights that Canada has a highly developed insurance market that is important to Canada’s economy.
- Regulation and supervision are conducted by federal and provincial authorities.
- Insurers can be incorporated under the federal or provincial regime.
Regulatory framework
- Federal level:
- Office of the Superintendent of Financial Institutions (OSFI) is responsible for prudential regulation and supervision of federally regulated insurers.
- Provincial level:
- Provincial supervisors oversee prudential oversight of provincially regulated insurers and conduct oversight of all insurers operating in their jurisdictions.
- Legal and operational arrangements:
- Group-wide supervision lacks a sufficiently strong legal foundation and consistency of application across jurisdictions.
- OSFI and Autorité des marchés financiers have no legal powers over unregulated holding companies and therefore rely on voluntary agreements with those companies.
Supervisory responsibilities and practices
- OSFI:
- Prudential regulation and supervision for federally regulated insurers.
- Provincial supervisors:
- Prudential oversight for provincially incorporated insurers.
- Oversight of all insurers operating within their jurisdictions.
- Cooperation:
- Federal-provincial cooperation and coordination should be further improved to strengthen oversight.
Key findings and concerns
- Canada’s insurance market is highly developed and economically important.
- Dual federal-provincial regulatory regimes create complexity in supervision.
- Group-wide supervision:
- Needs improvement in legal foundation and consistency of application.
- Supervisory reach over unregulated holding companies:
- Absent legal powers; OSFI and Autorité des marchés financiers depend on voluntary agreements to obtain information and apply prudential requirements for insurance groups.
Policy implications and recommendations
- Strengthen federal-provincial cooperation and coordination to improve supervision across jurisdictions.
- Improve the legal foundation for group-wide supervision and ensure consistent application across federal and provincial regimes.
- Address the supervisory gap over unregulated holding companies to reduce reliance on voluntary agreements and enhance the ability to obtain information and enforce prudential requirements.
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