Assuris’ mission is to protect Canadian policyholders if their life and health insurance company fails. Fulfilling that mission requires a constant state of readiness — ensuring that our resolution toolbox remains fit for purpose in light of industry’s current landscape and emerging trends. A critical part of that readiness is maintaining a clear, forward-looking understanding of the business environment and risks shaping the Canadian life and health insurance industry.
This article outlines Assuris’ approach to monitoring and assessing industry risks through our unique lens — and explains why that perspective calls for greater attention to liquidity risk.
We Anticipate Failure — We Do Not Prevent It
Insurers’ risk managers and supervisors focus on prevention. Their objective is to keep insurers financially sound and to intervene early when issues arise.
Assuris’ role is different. We do not prevent failure but must be ready should it occur. This distinction shapes our risk focus. We concentrate on risks that could materially impair solvency and plausibly lead to failure.
This approach allows us to identify members that may be approaching a failure point and to initiate targeted preparedness actions. For example, preparation will differ depending on whether a member is federally or provincially incorporated, or whether it has international operations. Such considerations directly influence how the resolution of a failed insurer would be handled.
Beyond the Risk of Failure
Assuris also focuses on risks associated with resolving a failed insurer. These resolvability risks include, for example, situations that could make a failed insurer less attractive to potential buyers or that could complicate cooperation with foreign authorities in a cross-border resolution.
Another important dimension is risks related to our funding system — specifically, how funds are collected from the industry to cover asset shortfalls following a failure. It is essential to understand what could undermine the adequacy of these funding tools. By anticipating such risks, we ensure that our funding system remains sufficient, equitable across member companies, and supportive of financial stability.
Assuris’ Industry Risk Framework
Assuris’ Top-of-mind Industry Risks
Geopolitical and severe economic downturn risks remain top of mind. Adverse market movements continue to represent the primary solvency risk for the life and health insurance industry, and Assuris closely monitors these developments.
We plan to devote increased attention to liquidity risk2 in 2026 and the coming years. Assuris must be prepared for all types of failure, including those driven by liquidity stress. Liquidity-driven failures tend to unfold quickly and require different resolution responses, particularly where urgent funding is needed.
Hedging program disruption3 is another key low-probability, high-severity risk on our radar. While hedging reduces an insurer’s market risk, it also creates reliance on counterparties. If a distressed insurer were to lose access to derivative counterparties, it could be left with significant unhedged market exposures. This could threaten its viability and make resolution more difficult by reducing buyer interest. Financial conditions could also continue to deteriorate after failure, further weakening the insurer’s balance sheet and increasing the potential need for industry funding.
Our industry risk assessment also covers a range of other industry risks, including pandemics, alternative investments, reinsurer failure, cyber threats, artificial intelligence, third-party dependencies, adverse health trends, and climate change. While these risks are not currently assessed at our highest level of concern from a failure, resolvability, or funding perspective, they remain important to the overall resilience of the life and health insurance industry. By staying attuned to all these risks, we ensure that our preparedness to protect Canadian policyholders evolves alongside the industry.
1 IAIS: International Association of Insurance Supervisors, FSB: Financial Stability Board, GRI: Global Risk Institute.
2 Risk arising mainly from derivatives margin calls or mass lapse events. Margin calls can be triggered by market movements or credit downgrades. Mass lapse events are often linked to market shifts that incentivize policyholders to replace existing contracts with higher-yielding ones.
3 Risk that an insurer is unable to maintain or roll over its derivative positions due to the loss of counterparties — typically following a credit rating downgrade that triggers derivative termination clauses, or during market-wide stress that reduces the capacity of the market to supply derivatives (e.g., systemic bank failure).
