July 6, 2012 Ms. Mercedes Aldana Senior Policy Analyst

July 6, 2012
Ms. Mercedes Aldana
Senior Policy Analyst
Insurance Policy & Deposit Institutions Policy
Financial Services Commission of Ontario
5160 Yonge Street, Box 85, 4th Floor
Toronto, ON M2N 6L9
Via email to: [email protected]
Re: Consultation Paper on Improving Solvency Supervision of Insurers in Ontario
Dear Ms. Aldana:
The Canadian Life and Health Insurance Association (CLHIA) is pleased to have this
opportunity to comment on the consultation paper entitled Improving Solvency
Supervision of Insurers in Ontario (Consultation Paper).
The CLHIA, established in 1894, is a voluntary association with member companies
which account for 99 per cent of Canada's life and health insurance business. The life
and health insurance industry is a major contributor to Ontario's economy. The industry:
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protects the financial future of some 10.2 million Ontarians;
made benefit payments to Ontarians amounting to more than 31.6 billion in 2010;
has $212.4 billion invested in the province; and
directly employs about 62,000 Ontarians.
As indicated in the Consultation Paper, the International Association of Insurance
Supervisors (IAIS) has established common standards for the solvency assessment of
insurers worldwide. These standards have been adopted by the Office of the
Superintendent of Financial Institutions (OSFI) while provincial jurisdictions, such as
Quebec, are in the process of implementing the new standards.
Improving the efficiency of regulation is an important objective to pursue. In this regard,
given that most insurers in Canada are incorporated federally and therefore fall under
OSFI's solvency oversight, we generally agree that it would make sense for Ontario to no
longer maintain a separate and duplicate solvency regime for a limited number of
1 Queen Street East
Suite 1700
Toronto, Ontario
M5C 2X9
1, rue Queen Est
Bureau 1700
Toronto (Ontario)
M5C 2X9
Tel: (416) 777-2221
Fax: (416) 777-1895
www.clhia.ca
Tél.: (416) 777-2221
Fax: (416) 777-1895
www.accap.ca
Toronto
●
Montreal
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Ottawa
insurers. The proposed approach would allow for the Financial Services Commission of
Ontario (FSCO) to focus its time and resources more fully on its role as the market
conduct regulator of the insurance sector.
The proposals in the Consultation Paper would provide a transition period for insurers
incorporated in Ontario to transfer their incorporation to jurisdictions in compliance with
the IAIS solvency standards. We understand that Ontario life and health insurers are
already moving in this direction.
In addition, according to the proposals, Ontario would require as a condition of licensing
that insurers be incorporated in a jurisdiction that meets the new international solvency
standards in order to carry on business in Ontario. As a result, insurers incorporated in a
province other than Ontario may be required to incorporate in another jurisdiction that
meets the IAIS solvency standards in order to be licensed and carry on business in
Ontario. Ultimately, the impact of this proposal on insurers will depend on whether other
provinces make the decision to maintain their own solvency standards, including whether
to align their rules with the IAIS solvency standards. Accordingly, we recommend that
FSCO ensure that other provincial regulators are aware of the Ontario proposals so that
they in turn can make insurers incorporated in those other jurisdictions aware of how they
could be affected if they carry on business or plan to carry on business in Ontario.
In all cases, we recommend that FSCO adopt realistic timeframes with insurers that
would be impacted by the proposals in order to facilitate an orderly transition. In this
regard, maintaining an open and ongoing dialogue with insurers that would be impacted
and other provincial regulators will be important.
Thank you for the opportunity to provide comments on this important issue. We would
be pleased to provide any other information or to discuss this matter with you, at your
convenience, if you would find it helpful.
Sincerely,
Original signed by
Brent Mizzen
Director, Policy Development
1 Queen Street East
Suite 1700
Toronto, Ontario
M5C 2X9
1, rue Queen Est
Bureau 1700
Toronto (Ontario)
M5C 2X9
Tel: (416) 777-2221
Fax: (416) 777-1895
www.clhia.ca
Tél.: (416) 777-2221
Fax: (416) 777-1895
www.accap.ca
Toronto
●
Montreal
●
Ottawa