As part of its Spring 2025 Quarterly Release Day, the Office of the Superintendent of Financial Institutions (OSFI) has launched three public consultations and announced updates to a key guideline for life insurers.
OSFI regularly reviews and updates its guidelines to keep pace with changes in institutions’ risk profiles and operating environments. These consultations allow the regulator to gather feedback from stakeholders, industry participants and the public. Alongside OSFI’s Policy Modernization initiative, this approach aims to ensure guidance remains aligned, predictable, transparent and reduces regulatory burden.
The consultations and updates announced seek to balance industry innovation and modernization with effective supervisory oversight, it said, enabling institutions to compete and manage risks while protecting depositors, creditors, and policyholders.
OSFI has opened a 60-day public consultation on proposed changes to the Liquidity Adequacy Requirements (LAR) Guideline. The changes are intended to enhance the stability of financial institutions by ensuring they hold sufficient liquid assets to meet their obligations.
Proposed updates include new funding categories for deposits involving non-bank financial intermediaries and structured notes. These measures build on earlier LAR updates, such as the introduction of a new Intraday Liquidity Regulatory Return developed in collaboration with the Canadian Bankers Association.
In addition, OSFI has launched a 90-day consultation on the Internal Liquidity Adequacy Assessment Process (ILAAP) discussion paper. The document outlines a more structured supervisory review process for liquidity risk in Canadian deposit-taking institutions, with OSFI identifying funding and liquidity as key risks facing these organizations.
OSFI has also started a 90-day consultation on proposed changes to the Minimum Capital Test (MCT) Guideline. The proposed revisions aim to simplify guidance on insurance risk related to unexpired coverage to improve consistency and clarity. The consultation includes updates to regulatory adjustments concerning net assets available for insurance receivables and modifications to capital confirmation requirements for user fees.
Alongside the consultations, OSFI has issued a Regulatory Notice detailing changes to the Life Insurance Capital Adequacy Test (LICAT). The notice outlines two main updates designed to increase insurers’ flexibility in risk management and enhance reinsurance oversight. One change removes the 5% cap on reductions in Tier 1 capital deductions related to stop-loss reinsurance, allowing insurers greater capital management flexibility while maintaining robust oversight. The other ensures that capital treatment for unregistered reinsurance of segregated fund guarantees aligns with that of other products.
