Information

This barrier is unrelated to the end of the transition period, following the United Kingdom's departure from the EU.

Public ID: PID-9NQ259

UK reinsurance firms deterred by high collateral requirements in Canada

in Canada

Trade barrier summary

Strict rules apply when a reinsurer is not registered in Canada. Its capital framework requirements are different for an unregistered (foreign) reinsurer compared to a federally registered insurer (FRI). The high collateral requirements for unregistered reinsurers discourage UK reinsurance firms. The need to hold more capital reduces the ability to make profitable investments. This lowers the level of international reinsurance market use. An FRI can reduce its required held capital for insurance risks ceded to a reinsurer (capital credit). An FRI can only take capital credit for reinsurance if an unregistered reinsurer has posted acceptable collateral in Canada. This collateral must be equal to 120% of the ceded unpaid claim reserve and unearned premiums. A custodial agent in Canada must hold the collateral.

Sectors affected

  • Financial and professional services

Resolved

No

Date reported

11 July 2019

Last updated

23 September 2021

Public ID

PID-9NQ259

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