The Office of the Superintendent of Financial Institutions (OSFI) released the final revised version of its Earthquake Exposure Sound Practices (Guidelines B-9) in late February, following public consultations that began last August.
The revised guideline comes from a working group created in 2010 comprised of OSFI and several provincial regulatory partners, including British Columbia Financial Institutions Commission (FICOM) and Québec’s Autorité des marchés financiers (AMF), along with Insurance Bureau of Canada (IBC). The group was formed to “emphasize and strengthen the principles-based approach to managing earthquake exposure” and “update the description of best practices in earthquake exposure management,” according to OSFI.
A letter containing a summary of comments received and OSFI’s responses to them are available on its website along with the new guidelines, which takes effect Jan. 1, 2014. In the letter, OSFI has asked all insurers to complete a self-assessment of their practices compared with the new guideline by Sept.30, 2013.
“OSFI has refreshed its guidance to reflect the lessons learned and technological changes that have occurred over the past fourteen years,” noted Mark Zelmer, assistant superintendent of the regulation sector. “The revised guideline will help Canadian insurance companies continue to be well prepared for the financial consequences if a major earthquake were to occur in Canada,” he added.
OSFI will continue to work with IBC and provincial regulators on related financial requirements and will incorporate any future changes made to the Minimum Capital Test (MCT) Guideline, it noted.