As part of the Financial Services Regulatory Authority of Ontario (FSRA) monitoring of Ontario insurers, we require all licensed insurers to provide the documents described below, unless otherwise noted:
We request that you submit a company Business Plan for the year 2021. As a minimum, the Plan for 2021 should include a full-year forecast of the Income Statement, Balance Sheet and the Minimum Capital Test as at year-end 2021. The Plan should be detailed enough to enable us to track your company’s progress against its key performance indicators at the end of each calendar quarter, but ideally on a monthly basis, and to assess the significance of any variance that may emerge in that quarter or on a year-to-date basis. Please include a narrative about the action plan that you believe would help us to better understand your plans for the year.
If you have not already provided us with your 2021 Business Plan, we would request that it be submitted within 60 calendar days from 31st December 2020 and in an electronic format (pdf copy).
Financial Condition Testing (FCT)
We require that all Ontario insurers (other than Fraternal Societies, Reciprocal Insurance Exchanges and insurers that are members of the Fire Mutuals Guarantee Fund) submit a FCT report to FSRA no later than September 30 of the current year. Please submit one electronic copy (signed pdf) of the report.
Since the FCT process involves a projection of the changes in financial conditions under various scenarios, we expect that the company board of directors and senior management will review and assess the significant risks and the implications from the Business Plan on capital with the Appointed Actuary, and take actions as needed. The FCT report is expected to be prepared in accordance with the Canadian Institute of Actuaries Standards of Practice and signed by the Appointed Actuary.
On June 25, 2020, the IASB issued 'Amendments to IFRS 17' addressing concerns and challenges that were identified after IFRS 17 was published in 2017. Included in the amendments to IFRS 17 is the deferral of the effective date to January 1, 2023.
IFRS 17 replaces IFRS 4, the current insurance accounting standard, and is effective for annual periods beginning on or after January 1, 2023. The Canadian Accounting Standards Board endorsed IFRS 17, which is now incorporated into Part I of the CPA Canada Handbook - Accounting.
Ontario insurers are subject to IFRS and thus, to this reporting standard, which will affect the recognition and measurement, and presentation and disclosure of insurance contracts.
FSRA expects Ontario insurers to continue efforts towards implementation in 2023 and to use the extension for testing and quality assurance purposes. Although the updated LICAT and MCT guidelines were shared by OSFI in its June 27th, 2018 letter titled “LICAT and MCT 2021 Review for IFRS 17”, it intends to finalize the LICAT/MCT/MICAT 2023 guidelines in 2022 to align implementation with the new IFRS 17 effective date.
For more information, please visit OSFI’s website for IFRS 17 Transition and Progress Report Requirements for Federally Regulated Insurers as these will be applicable to Ontario Incorporated insurers as well.