7 April 2021
GFIA has today published its response to a consultation conducted by the Canadian Office of the Superintendent of Financial Institutions (OSFI) on its draft revised guideline on large property and casualty exposures and investment concentrations.
While the new draft is more principle-based, and more focused on supervision, GFIA remains concerned about several issues in the guideline, particularly those that could restrict the ability of foreign reinsurers to transfer risk outside of Canada. This would undermine the fundamental principle of global risk diversification that is vital to avoid the concentration of risk in any one market.
Reinsurance markets are global in nature and depend on the global fungibility and transferability of capital across jurisdictions. Large commercial insurers and reinsurers rely on this globally accepted and long-standing insurance business model to properly serve both local and multinational clients.
The OSFI should therefore continue to deepen its collaboration with regulators and supervisors in foreign reinsurers’ home markets, and take into account the supervision that is already being conducted.