Insurance groups that are active on a global scale will not get the support of OSFI. Canada’s big financial regulator has mentioned that it won’t be accepting a capital standard proposed by these large insurance groups. OSFI believes that this standard is just not fit for the Canadian market at this point in time.
While OSFI has seemed to give mixed signals about their views on the global standard, they are not completely negative towards the future outlook. The International Association Of Insurance Supervisors seemed to have OSFI on their side in earlier years. But in a rare move, OSFI has backed out and instead turned towards monitoring for the next several years.
OSFI Isn’t Entirely Against It All
Canada’s financial regulatory powerhouse, OSFI, said it is “broadly supportive” when it comes to the sought-after goals of the standard. However, the requirements on capital have been stated as being “too high” in general. It’s uncommon for OSFI to disagree with such proposals. What at first seemed like an agreement to be started in 2020, actually turned out to be a disagreement from this massive Canadian regulator.
The International Association Of Insurance Supervisors
So, how did this global standard start? It was announced at a meeting that took place among the IAIS, which meets up for a conference once a year. It was initially brought to attention back in 2014 that IAIS wanted to develop capital requirements with a focus on risk. Only 2 years afterwards, in 2016, OSFI’s Mark Zelmer claimed that they were working closely with IAIS to develop this capital standard.
But OSFI doesn’t support the global standard as it is currently proposed. In 2019, OSFI mentioned that it will continue a “5-year monitoring” in order to develop a plan that will truly be beneficial in the long run.
The Financial Stability Board plays a role in all of this as well. They are vital to the promotion of the implementation for stability among the sector of financial institutions. The Financial Stability Board has stated that they are welcoming of the IAIS’s holistic-nature of the framework on the global standard. Even so, OSFI is not on board at the current time.
What Do The Analysts Say?
The analysts have mentioned that it’s extremely rare for OSFI to venture away from the standards of global regulations. OSFI has been responsive in the past to what it has called “differences” in the domestic world. This shows that there are some occasions in which the Canadian insurance and banking regulator powerhouse comes to disagreements.
Planning Still To Come
OSFI may have rejected the current global capital standard, but the financial and insurance regulator doesn’t seem to be entirely against the standard. There is still more planning and processing to follow up on. While it’s rare for OSFI to make disagreements in this nature, it’s not completely unheard of. A compromise could very-well be in the making sometime soon. As for now, though, there are some amendments needed before acceptance is given by OSFI.