Ongoing resolution planning for Canadian life and health insurance companies is instrumental to reduce the risk of an insurer’s disorderly failure and maximize policyholder protection. Resolution planning identifies costs, risks and addresses impediments to a successful resolution of a failing life and health insurer. This planning is also required for Canada’s largest and most complex insurers that have been designated as Internationally Active Insurance Groups under the International Association of Insurance Supervisors Common Framework standards.
As the expert independent authority on resolution for Canada’s life and health insurance industry, Assuris is currently mandated to prepare resolution plans and resolvability assessments for member life and health insurance companies as part of the regulatory staging process (see OSFI (opens in new tab) and AMF (opens in new tab) Guidelines to Intervention), when they are at risk of failure or are staged for intervention by their prudential supervisor.
However, a longer runway is needed to ensure an orderly failure, maximize Canadian policyholder protection, and to be consistent with international standards as well as emerging best practices of leading jurisdictions, such as Australia, Singapore, the European Union and the United Kingdom. Advance resolution planning will also enable Assuris to develop strategies to address any resolution challenges, including facilitation of cooperation among international jurisdictions.
MOO Amendments
In July 2024, the amendments to Assuris’ Memorandum of Operation (MOO) (see text within blue rectangles in Part I of the MOO) came into effect. The amended MOO formalizes our taking responsibility for working directly with our member companies on advance resolvability assessments and resolution planning in ‘times of peace’ when insurers are not at risk of failing.
It is important to note that through the ‘special purpose requests’ provision already in its By-Law, Assuris had the capacity and power to obtain information from its member companies to perform advance resolution planning and resolvability assessments. However, the MOO amendment clarified that the member company’s information sought by Assuris further to ‘special purpose requests’ could refer to information allowing resolution planning or resolvability assessments on an ongoing basis, before the companies experience a failure risk.
Consultation Process for the MOO Amendments
The amendments to the MOO that became effective in July formally concluded nearly a year of consultation that Assuris undertook on the proposed amendments with member companies representing approximately 90% of the Canadian life and health insurance industry, the Canadian Council of Insurance Regulators Assuris-PACICC Subcommittee, the Autorité des marchés financiers (AMF), the Office of the Superintendent of Financial Institutions (OSFI) and the Canadian Council of Insurance Regulators.
Part I- Statement of Purpose
1.01 Purpose
This Memorandum of Operation describes the Canadian Life and Health Insurance Compensation Corporation (the “Corporation”) protection of life insurance and health benefits for policyholders. Reference is made to By-Law No. 1 of the Corporation, as it may be amended, supplemented, and restated from time to time, (the “By-Law”).
Pursuant to the By-Law, the Memorandum of Operation can also include provisions “establishing requirements on the part of its Members to provide financial and other information to the Corporation to enable and facilitate that attainment of its objects” (By-Law, Article 15.2.4) and “governing any other arrangements or procedures the Corporation may establish with its Members, policyholders, a Liquidator, a Regulator or other compensation corporation which will enable and facilitate the attainment of the objects of the Corporation” (By-Law, Article 15.2.5).
If there are any conflicts between the terms of this Memorandum of Operations and the By-Law, the By-Law shall prevail.
1.02 Resolution Planning and Resolvability Assessment
In addition to the information that each Member will provide the Corporation concerning the Member, its parent or affiliates pursuant to Article 6 of the By-Law, each Member will also provide the Corporation with information to satisfy special purpose requests made by the Corporation to assist the Corporation in:
- assessing the resolvability of a Member and making recommendations on how the resolvability could be improved for a Member or a group of Members; or
- planning for the resolution of a Member or a group of Members.
Without limiting the generality of the foregoing, ‘special purpose requests made by the Corporation’ may refer to information, analysis and documentation which the Corporation determines is necessary or desirable in order to (a) assess the Member’s (or group of Members) resolvability and to make recommendations on how that resolvability could be improved, or (b) planning for the resolution of a Member or group of Members.
1.03 Confidentiality
The provisions under Article 6.3 of the By-Law apply to all information regarding the business and/ or affairs of a Member, its parent or affiliates obtained by the Corporation under Article 1.02 of this Memorandum of Operation.
