Regulation (January 01, 2009)

OSFI OUTLINES PART XIII NOTIFICATION REQUIREMENTS

The Office of the Superintendent of Financial Institutions has outlined the type of notice a ceding company can expect to receive from a reinsurer that experiences a change in status as a result of OSFI’s changes to Part XIII of the Insurance Companies Act (effective Jan. 1, 2010).

OSFI’s Implementation Instructions, now posted on its Web site, will require that a foreign company wishing to remove some or all of the liabilities reported on the books of its Canadian branch must notify, in writing, the federally regulated cedant that:

• it considers the liabilities in respect of those risks to have been reinsured outside Canada;

• it intends to request OSFI’s approval to remove the liabilities from its Canadian books so that no assets will be vested in Canada for the benefit of the ceding federally regulated insurer;

• if the request is approved, OSFI will then consider the company to be an unregistered reinsurer;

• it requests the ceding company to raise any objections with the foreign company within 30 days of receiving the notification.

INDUSTRY BROADLY SUPPORTS PRINCIPLES FOR MANAGING CONFLICTS

Canada’s insurance industry is broadly supporting three principles for managing conflicts of interest proposed by the country’s insurance market conduct regulator in 2006, a survey has found. These principles include ensuring:

• the priority of a client’s interest;

• disclosure of conflicts or po- tential conflicts of interest; and

• product suitability.

In its final report on the adoption of the principles, released in December 2008, the CCIR survey of property and casualty and life insurers and intermediaries across Canada found that 85% of intermediaries answered “Always or most of the times” when asked if they had implemented activities and practices that supported the principles at the point of sale.