Reinsurance (January 01, 2009)

OSFI ISSUES CONSULTATION PAPER ON REINSURANCE

Canada’s solvency regulator, the Office of the Superintendent of Financial Institutions (OSFI), has issued its much-anticipated consultation paper on reinsurance.

The 21-page document offers a broad synopsis of issues the regulator is currently considering. OSFI does not take a position on any of the issues discussed in its paper.

A section on unregistered reinsurance looks at issues such as collateral requirements, the 25% limit on risks ceded to unregistered insurers and streamlining approval requirements for unregistered reinsurance with related parties.

In the registered reinsurance section of the paper, OSFI is seeking industry opinion on capital requirements and a limit that prevents property and casualty insurers from ceding more than 75% of their gross premiums to reinsurers.

The full paper is available at http://www.osfi-bsif.gc.ca/osfi/index_e. aspx?ArticleID=3

OSFI UPDATE: P&C INSURERS’ NET INCOME DROPS CDN$700-MILLION

Canadian federally regulated insurers saw their collective net income drop about Cdn$700 million during the first nine months of 2008 compared to the same period last year.

Insurers reporting to the Office of the Superintendent of Financial Institutions (OSFI) posted a Cdn$1.5-billion net income during the first three months of 2008, down from the Cdn$2.3 billion it reported during the same period last year.

OSFI figures show that insurers reporting to it saw a $400-million drop in net investment income during the first nine months of 2008.

Their investment income fell from Cdn$2.1 billion during the first nine months of 2007 to Cdn$1.7 billion over the same period this year.

IBC TO MOVE AHEAD WITH HCAI AFTER SUMMER 2009

The Insurance Bureau of Canada (IBC) has approved plans to move forward with the re-introduction of the Health Claims for Auto Insurance (HCAI) electronic data-exchange system, although re-introduction will not happen before testing begins in the summer of 2009.

HCAI is a Cdn$20-million electronic claims system intended to link participants involved in Ontario’s auto insurance system, including insurers, health care providers and the provincial government.

At the request of the IBC, Ontario’s provincial insurance regulator, the Financial Services Commission of Ontario (FSCO), suspended operation of the system in April 2008. IBC said in a letter to FSCO at the time that HCAI users were having difficulty accessing and using the electronic database.

FSCO identified the resumption of HCAI as one of its priorities for 2008. IBC says regular updates on HCAI’s progress will be provided at www.hcaiinfo.ca.