Strengthening Quake Preparedness

New guidelines from the Office of the Superintendent of Financial Institutions (OSFI) will require property and casualty insurers operating in Canada to take a more comprehensive approach to managing their earthquake risk by considering their exposure across the entire country. The guidelines, which...

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Bibliographic Details
Published in:Canadian Underwriter 2014-07, Vol.81 (7), p.44
Main Author: Moresco, Justin
Format: Article
Language:English
Subjects:
Capital requirements
Earthquakes
Property & casualty insurance
Risk exposure
Online Access:Get full text
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Summary:New guidelines from the Office of the Superintendent of Financial Institutions (OSFI) will require property and casualty insurers operating in Canada to take a more comprehensive approach to managing their earthquake risk by considering their exposure across the entire country. The guidelines, which come into effect in 2015, are a positive step forward for managing Canada's high earthquake risk. The aim is to strengthen the insurance industry's financial preparedness to meet its obligations to policyholders in the event of a major earthquake. Foreign regulators are considering the OSFI guidelines as a model for their own jurisdictions. However, the guidelines do not consider earthquake risk from a fully probabilistic perspective, which could have implications for some insurers. Recognizing the significant impact of the new guidelines to insurers' capital requirements, OSFI is allowing insurers to gradually phase in their increased earthquake risk exposures through to 2022.
ISSN:0008-5251
1923-3426