OSFI to focus on Sept. 11 risk spread

The ability displayed by the property and casualty insurance industry and other financial institutions in effectively dealing with the events of September 11 testifies to the value of effective risk management and planning, observes Nick Le Pan, head of the Office of the Superintendent of Financial Institutions (OSFI).

Speaking at the Insurance Bureau of Canada’s (IBC) annual Regulatory Affairs Symposium held in November, Le Pan did suggest, however, that the federal regulator will be keeping a close watch on developments. “These events [September 11] undoubtedly have some consequences that are not yet fully understood.” As such, Le Pan says OSFI is continuing to focus on “risk sharing arrangements” that existed in the industry prior and after the attacks, and how the spread of losses arising from the September 11 events will work in practice. “We are focussing more intently on exposures of institutions to sectors likely to be affected by the events of September 11. We are focussing on what the increased uncertainty of the economic outlook and economic slowdown means for particular companies.”

Le Pan also used the symposium to urge insurers to comply with government law enforcement authorities investigating terrorism financing. “Requirements to freeze assets and property apply to the p&c industry as well.” Furthermore, Le Pan says the regulator is also reviewing how it managed during the September 11 crises, and what measures can be taken to enhance emergency preparedness.

On a different tack, Le Pan says OSFI has agreed to work with insurers in compiling a study of capital, actuarial and accounting requirements in Canada relative to elsewhere. “I look forward to this being completed on a timely basis.”