Our Financial Services team reviews this past year’s biggest insurance regulatory changes, plus provides insights to help you make sense of what’s coming in 2025.
OSFI’s New Supervisory Framework and Focus On Non-Financial Risks
There were several major changes from the Office of the Superintendent of Financial Institutions (OSFI) in 2024, applicable to all federally regulated financial institutions (FRFIs):
- OSFI issued a major update of its Supervisory Framework, effective as of April 1, 2024. It expands OSFI’s 4 point risk rating scale to 8 points, intended to provide FRFIs with an earlier indication of OSFI’s supervisory concerns. A FRFI’s overall risk rating will be based on business risk and financial resilience, but also on non-financial risks stemming from operational resilience and risk governance.
- As detailed in our bulletin Final OSFI Integrity and Security Guideline Released, OSFI introduced a new guideline requiring FRFIs to have policies and procedures in place to counter threats to their integrity or security, including foreign interference. The majority of the guideline is effective as of January 31, 2025. This follows the expansion of OSFI’s mandate in the federal 2023 Budget legislation to include oversight of FRFI’s integrity and security.
- In August 2024, OSFI issued an updated Guideline E-21: Operational Resilience and Risk Management. As outlined in our bulletin OSFI Issues Updated Operational Risk Guideline and Pilots New Approach, OSFI’s expected outcome remains that operational risk management practices support operational resilience during disruptions. The governance and risk management expectations are in force, with a phased implementation over 2025 and 2026 for the remainder of the guideline. Testing for all critical operations must be completed by September 2027.
- OSFI made significant changes in 2023 to Guideline B-10: Third Party Risk Management, which came into effect in May 2024. In 2024, the guideline was extended to foreign insurance branches, effective March 31, 2025.
- In November 2024, OSFI issued a Notice on Culture Risk Management , which was effective immediately for all FRFIs. It replaced the draft Culture and Behaviour Risk Guideline previously published for consultation, although updated guidance is expected in 2025.
Provincial Changes Impacting Insurers
Several provinces introduced changes or possible changes to their supervisory frameworks:
- In November 2024, the Alberta government announced significant reforms to automobile insurance in the province. As of January 1, 2025, the rate cap will increase from an expected 1.9% to 7.5%. The government also announced the establishment of a new privately-delivered “Care First” model for automobile insurance. Extensive legislative and regulatory changes will be required to implement this new model, which is expected to be effective for January 1, 2027. More details are available on the Government of Alberta website.
- A new licensing framework for life and health Managing General Agents (MGAs) is coming to Ontario. Amendments to the Insurance Act set out in Bill 216, the Building Ontario For You Act (Budget Measures), 2024 provide the foundation for the framework. Once effective, corporations, partnerships and other prescribed entities performing certain services will need to obtain a license to operate as a life and health MGA. It is expected that the Financial Services Regulatory Authority of Ontario (FSRA) will use its rule making authority to establish requirements for the framework before it is up and running.
- Several Guidelines issued by the FSRA came into force in 2024, including its IT Risk Management Guideline effective April 1 , 2024, its Enforcement: General Administrative Monetary Penalties Guidance effective March 11, 2024, and its guidance on Principles-based Regulation in September 2024.
- Québec’s Bill 30, An Act to amend various provisions mainly with respect to the financial sector (PDF, 721 KB) was assented to on May 9, 2024. This Act amends, amongst others, the Québec Insurers Act and the Act respecting the distribution of financial products and services. The changes include provisions applicable to the distribution of insurance by car dealerships, exceptions to acts reserved to claim adjusters, new obligations for life insurers and an exception to the review of the authorization of an insurer when it becomes the holder of control of a group with operations that do not have a significant impact on the insurer.
- The Autorité des marches financiers (AMF) and a major multinational retailer ("retailer") entered into an agreement whereby the retailer committed to ensuring that its product protection plan is offered by an authorized insurer in Québec. The AMF concluded that the accidental damage coverage of the product protection plan constitutes insurance, since the covered risk is not limited to the device defects or malfunction. Consequently, this coverage must be offered by an insurer and distributed under the distribution without a representative regime (DWR). The retailer agreed to an administrative penalty of C$175,000. More details are available on the Autorité des marchés financiers website .
- Artificial intelligence continued to be a focus in 2024, as regulators sought to understand and mitigate its risks. More details are contained in our bulletin Navigating Artificial Intelligence Risks for Financial Institutions: 2024 Insights from OSFI, FCAC and the AMF.
- The AMF published on October 23, 2024 a draft of the Regulation respecting the management and reporting of information security incidents by certain financial institutions and by credit assessment agents (PDF, 279 KB). This regulation imposes new obligations on certain financial institutions, including requirements to put in place an information security incident management policy, report incidents and progress to the AMF until the incident is resolved, and maintain a record of all incidents. The new regulation is expected to come into force on April 23, 2025.
- The Québec government has introduced new Regulation respecting complaint processing and dispute resolution in the financial sector (PDF, 348 KB). This new regulation, which applies to insurers and insurance intermediaries amongst others, will standardize the practices for resolving complaints. The regulation will come into effect on July 1, 2025.
- In July 2024, the AMF published its Climate Risk Management Guideline (PDF, 421 KB). The requirements generally overlap with those in OSFI’s Guideline B-15 on Climate Risk Management but include additional obligations relating to the fair treatment of clients.
- The British Columbia Financial Services Authority published a Regulatory Statement (PDF, 280 KB) in April 2024, reminding stakeholders that in British Columbia any product warranties and vehicle warranties are considered to be insurance. A similar Interpretation Bulletin (PDF, 193 KB) was released by Alberta’s Superintendent of Insurance. In both cases, the intended audience appears to be automobile dealers selling service contracts and guarantees without the appropriate authorization.
- As of April 1, 2024, insurers in British Columbia are expected to have adopted and comply with the Insurer Code of Market Conduct. The Code is based on the 12 customer outcomes in the CCIR’s guidance on the Conduct of Insurance Business and the Fair Treatment of Customers guidance (PDF, 730 KB).
Looking Ahead
The upcoming year will continue to be busy for insurance regulatory developments. As outlined, we are expecting numerous developments from OSFI and provincial regulators.
