## Canada: Financial Sector Assessment Program-Technical Note-Insurance Sector: Regulation and Supervision

_IMF Staff Country Reports, January 24, 2020_

## Source details

**Canonical URL:** [Canada: Financial Sector Assessment Program-Technical Note-Insurance Sector: Regulation and Supervision](https://www.imf.org/en/publications/cr/issues/2020/01/23/canada-financial-sector-assessment-program-technical-note-insurance-sector-regulation-and-48975)

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## Bibliographic details
- Published: January 24, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513527208.002

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### 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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_Source: https://www.imf.org/en/publications/cr/issues/2020/01/23/canada-financial-sector-assessment-program-technical-note-insurance-sector-regulation-and-48975_