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Guideline
- Date
- 27 February 2025
- Distribution
- Insurance
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Accordion items
-
Go to Adopted guidance
- Assurance on Capital, Leverage and Liquidity Returns
- A-4 Regulatory Capital and Internal Capital Targets
- B-1 Prudent Person Approach
- B-2 Investment Concentration Limit
- B-2 Large Exposure Limits
- B-3 Sound Reinsurance Practices and Procedures
- B-4 Securities Lending (Life)
- B-4 Securities Lending (P&C)
- B-5 Asset Securitization
- B-7 Derivatives Sound Practices
- B-9 Earthquake Exposure Sound Practices Memorandum
- B-10 Third Party Risk Management
- B-11 Pledging
- B-20 Residential Mortgage Underwriting Practices and Procedures
- Corporate Governance
- D-5 Accounting for Structured Settlements
- E-2 Commercial Lending Criteria
- E-5 Retention/Destruction of Records
- E-6 Materiality Criteria for Related Party Transactions (Life)
- E-6 Materiality Criteria for Related Party Transactions (P&C)
- E-10 Use of Depositories by Insurance Companies
- E-13 Regulatory Compliance Management
- E-15 Appointed Actuary: Legal Requirements, Qualifications, and Peer Review
- E-18 Stress Testing
- E-19 Own Risk and Solvency Assessment (“ORSA”)
- E-21 Operational Risk Management
- E-22 Margin Requirements for Non-centrally Cleared Derivatives
- IFRS 9 Financial Instruments and Disclosures
- Life Insurance Capital Adequacy Test (“LICAT”)
- Memorandum to the Appointed Actuary
- Minimum Capital Test (“MCT”)
- Mortgage Insurer Capital Adequacy Test (“MICAT”)
Introduction
On an ongoing basis, BCFSA evaluates and, where appropriate, adopts guidance issued by the Office of the Superintendent of Financial Institutions (“OSFI”) for the insurance segment in British Columbia (“B.C.”). This Guideline sets out which OSFI guidance BCFSA has adopted and, where applicable, provides further instruction on BCFSA’s application of the guidance.
BCFSA expects insurance companies incorporated in B.C. (“B.C. insurers”) to follow all applicable adopted guidelines as outlined in this Guideline. For non-federal extraprovincial insurance corporations (“non-federal extraprovincial insurers”), BCFSA expects them to follow the guidance of their primary jurisdiction unless stated otherwise in the notes below.
A quick reference table is provided in the Appendix.
Adopted guidance
Applicability: Property and Casualty (“P&C”) and Life insurance.
Effective date: November 30, 2022.
BCFSA Notes: At this time, BCFSA does not expect insurers to follow the third expectation outlined in the guideline for the Internal Audit opinion on key regulatory returns including related controls and processes. Please refer to the advisory for more details and adoption date.
Applicability: Property and Casualty (“P&C”) and Life insurance.
Effective date: January 1, 2025.
BCFSA Notes: None.
Applicability: P&C and Life insurance.
Effective date: January 1993.
BCFSA Notes: BCFSA’s prudent standards requirement is set out in section 136(1) and (2) of the Financial Institutions Act (“FIA”). B.C. insurers should note that section 136(1) of the FIA imposes an additional fiduciary duty to “make investments without undue risk of loss and with a reasonable expectation of a fair return on the investments.”
Under the FIA, B.C. insurers are required to file investment and lending policies with BCFSA.
The statutory limits set out in the Appendix to B-1 Prudent Person Approach do not apply to B.C. insurers.
Non-federal extraprovincial insurers
Where the primary regulator of a non-federal extraprovincial insurer has already adopted a prudent person approach to investment and lending, BCFSA will rely on that approach to the extent that it remains aligned with OSFI’s framework as set out in the B-1 guideline. Note that non-federal extraprovincial insurers operating in B.C. are also required to follow section 136(1) and (2) of the FIA by way of section 158(3)(b).
Applicability: P&C insurance.
Effective date: March 1994 for prior version, January 2029 for updated version.
BCFSA Notes: Please refer to both the prior and updated Guidelines until B-2 (updated) is fully in effect.
Updated Guidance:
Prior Guidance:
Applicability: Life insurance.
Effective date: August 2003.
BCFSA Notes: Note that sections 8 and 8.1 of the Capital Requirements Regulation (“CRR”) require that B.C. insurers adhere to the Minimum Capital Test (“MCT”) and the Life Insurance Capital Adequacy Test (“LICAT”) guidelines.
Applicability: P&C and Life insurance.
Effective date: December 2010 for prior version; January 2029 for updated version.
BCFSA Notes: Please refer to both the prior and updated Guidelines until B-3 (updated) is fully in effect.
Updated Guidance:
Prior Guidance:
B-3 Guideline (2010) (will open in a new tab)Applicability: Life insurance.
Effective date: February 1997.
BCFSA Notes: If a B.C. insurer chooses to employ an agent for the administration of a securities lending program, this activity is governed under section 3(j) of the Investment and Lending Regulation (“ILR”).
Applicability: P&C insurance.
Effective date: September 1996.
BCFSA Notes: If a B.C. insurer chooses to employ an agent for the administration of a securities lending program, this activity is governed under section 3(j) of the Investment and Lending Regulation (“ILR”).
Applicability: P&C and Life insurance.
Effective date: January 2019.
BCFSA Notes: Sections 8 and 8.1 of the CRR require that B.C. insurers adhere to the MCT and LICAT guidelines.
To set up a Special Purpose Entity (“SPE”), a B.C. insurer must have prior approval from BCFSA under section 138(1)(d) of the FIA. Note that an SPE is not an exempt entity.1
1. For the definition of “entity,” refer to s. 1(1) of the FIA.
Applicability: P&C and Life insurance.
Effective date: November 2014.
BCFSA Notes: None.
Applicability: P&C insurance.
Effective date: February 2013.
BCFSA Notes: None.
B-9 Guideline (will open in a new tab)Applicability: P&C and Life insurance.
Effective date: January 2028.
BCFSA Notes: Insurers should remain compliant with BCFSA’s currently in-force Outsourcing Guideline until it is formally rescinded for insurance on January 1, 2028.
Applicability: P&C and Life insurance.
Effective date: May 2003.
BCFSA Notes: B.C. legislation does not require insurers to set out policies regarding the pledging of securities. However, BCFSA considers this to form part of sound practices. Policies regarding the use of security for loans and leases must be set out in the insurer’s Investment and Lending Policy as per section 3(c) of the ILR.
Applicability: P&C and Life insurance.
Effective date: October 2017.
BCFSA Notes: B.C. legislation does not set out maximum loan-to-value (“LTV”) ratios for uninsured residential mortgages, non-conforming residential mortgages, or the non-amortizing component of home equity lines of credit (“HELOCs”). However, BCFSA expects B.C. insurers to establish appropriate limits for residential mortgage LTV ratios and to look to B-20 for guidance.
Applicability: P&C and Life insurance.
Effective date: September 2018.
BCFSA Notes: None.
Corporate Governance Guideline (will open in a new tab)Applicability: P&C insurance.
Effective date: January 2023.
BCFSA Notes: None.
D-5 Guideline (will open in a new tab)Applicability: Life insurance.
Effective date: June 1992.
BCFSA Notes: Commercial lending powers are established in section 65 of the FIA and section 2(g) of the Prescribed Types of Business Regulation.
For the purpose of this guidance, BCFSA follows the same definition of “commercial loan” as articulated in E-2.
Applicability: Life insurance.
Effective date: May 1993.
BCFSA Notes: None.
E-5 Guideline (will open in a new tab)Applicability: Life insurance.
Effective date: October 1993.
BCFSA Notes: None.
E-6 Bulletin (Life) (will open in a new tab)Applicability: P&C insurance.
Effective date: December 1993.
BCFSA Notes: None.
E-6 Bulletin (P&C) (will open in a new tab)Applicability: P&C and Life insurance.
Effective date: December 1996.
BCFSA Notes: B.C. insurers should observe the safekeeping requirements outlined in sections 6, 7, and 8 of E-10. Specific references to OSFI legislation or regulations are not applicable.
E-10 Guideline (will open in a new tab)Applicability: P&C and Life insurance.
Effective date: November 2014.
BCFSA Notes: None.
E-13 Guideline (will open in a new tab)Applicability: P&C and Life insurers.
Effective date: September 2012.
BCFSA Notes: B.C. insurers are not required to conduct a limited annual review in situations where there have been no material changes in the previous year affecting the valuation of policy liabilities and ceded reinsurance assets. Note that BCFSA still expects a limited annual review where material changes have occurred, in addition to the regular three-year review cycle.
E-15 Guideline (will open in a new tab)Applicability: P&C and Life insurance.
Effective date: December 2009.
BCFSA Notes: Unlike federally regulated insurers, there is no annual Financial Condition Testing (“FCT”) requirement for B.C. insurers. BCFSA expects the insurer’s Board, in close consultation with its senior management and appointed actuary, to determine the frequency of preparation. The minimum frequency should be once every two years, or as directed by the Superintendent of Financial Institutions. More frequent testing might be necessary depending on the insurer’s risk profile.
E-18 Guideline (will open in a new tab)Applicability: P&C and Life insurance.
Effective date: January 2018.
BCFSA Notes: None.
Applicability: P&C and Life insurance.
Effective date: June 2016 for prior version; updated version effective in phased approach starting January 2026 and ending in full adherence January 2030.
BCFSA Notes: Please refer to both the prior and updated Guidelines until E-21 (updated) is fully in effect. See 2025 Advisory for detail on the phased approach.
Updated Guidance:
- E-21 Guideline (Updated) (will open in a new tab)
- Advisory - BCFSA Adopts Guideline E-21 ‘Operational Risk Management and Resilience’ (will open in a new tab)
Prior Guidance:
Applicability: P&C and Life insurance.
Effective date: April 2020.
BCFSA Notes: None.
E-22 Guideline (will open in a new tab)Applicability: P&C and Life insurance.
Effective date: January 2023.
BCFSA Notes: None.
Applicability: Life insurance.
BCFSA Notes: As there are annual versions of this guideline, B.C. insurers should adopt the latest version at the time of reporting.
Applicability: P&C insurance.
BCFSA Notes: As there are annual versions of this guideline, B.C. insurers should adopt the latest version at the time of reporting.
Applicability: P&C insurance.
BCFSA Notes: As there are annual versions of this guideline, B.C. insurers should adopt the latest version at the time of reporting.
Guideline (will open in a new tab)
Appendix: Quick Reference Sheet
Please visit OSFI’s Guidance Library to find the guidelines mentioned below.