CANADA REGULATOR ADVISES INSURERS ON QUAKE EXPOSURE

Canada's Office of the Superintendent of Financial Institutions (OSFI) is advising non-life insurers to be ready to examine their earthquake exposures on a Canada-wide basis, reports Canadian Underwriter. OSFI assistant superintendent Mark Zelmer said that the new approach would be phased in over 10 years to enable companies to adjust how they calculate their probable maximum loss. Mr Zelmer said that the new rules did not mean that insurers would be expected to be able to cope with simultaneous quakes in British Columbia and Quebec at the same time. Instead, he said it meant that "we will expect you to compute the probability of an earthquake major loss, assuming that an event could take place in either location, bearing in mind where your exposures are located and that the probability of an event in both locations is highly remote". This would mean that for companies with multiple province exposure, the required solvency resources would be raised by "less than 40%".