TORONTO (Reuters) - Canada has unveiled a framework of regulatory changes for its insurance industry, part of a multi-year global financial services revamp that has already seen stricter capital and liquidity requirements imposed on banks around the world.
The framework, which calls for industry consultations that will lead to new rules to be put in place in the coming years, promises a revamp of corporate governance, risk assessment and capital requirements of insurers, among other things.
It was released on Wednesday by the Office of the Superintendent of Financial Institutions, the country’s financial services regulator.
“Although Canada’s regulatory framework for life insurance has responded well in the face of global financial turmoil, OSFI and the industry must continue to learn and adapt to changing circumstances and practices, and implement improvements where needed,” the regulator said.
Global regulators, including OSFI, have already begun implementing tighter banking regulations, which were developed in the wake of the 2008 financial crisis to make sure a similar event does not take place again.
Now Canada’s regulator is taking aim at the insurers, whose shares are still trading at a fraction of their pre-crisis levels, as historically low bond yields and sluggish stock markets have hammered their profits.
OSFI will undertake public consultations over the next year, with the eye to issuing final guidance in late 2013 and 2014.
Canada’s life insurance industry is dominated by four domestic players: Manulife Financial, Sun Life Financial, Great-West Lifeco, and Industrial Alliance Insurance and Financial Services.
Reporting By Cameron French; Editing by Cynthia Osterman