C-OSFI proposed a draft Life Insurance capital adequacy test (LICAT) 2025 guideline.
Established standards, using a risk-based approach, for measuring life insurer risks.
Guideline with Regulatory Capital and Internal Capital Targets provide the framework within which superintendent assesses whether life insurer maintains adequate capital.
For life insurers with segregated fund guarantee (SFG) business, developed a new framework to determine capital requirements for SFG risk to replace current method.
Comprised a standard approach and a simplified option, where that latter available to insurers with very small total SFG portfolios (total guaranteed value of $100mn/less).
Under the standard approach, capital requirements will be calculated by applying shocks to SFG liabilities; will replace existing internal models and factored approach.
Additionally, made minor adjustments and clarifications to apply framework accurately.
Minor consequential updates to Own risk and solvency assessment (ORSA) key metrics report form and instructions, solo capital framework for federally regulated life insurers
Guideline A-4 regulatory capital and internal capital targets due to LICAT guide change
Consultation
Information session scheduled for Sep. 5, 2024; comments due by Oct. 22, 2024.
Final LICAT 2025 guideline published on Nov. 21, 2024; will take effect Jan. 1, 2025.
