Insurance Regulatory Year In Review And 2026 Outlook

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 2026.

Harmonized Provincial Insurance Regulation?

The impact of tariffs and interprovincial trade barriers dominated headlines in 2025. In response, the federal government introduced several initiatives being watched by the insurance industry:

• In June, the Free Trade and Labour Mobility in Canada Act was passed to promote free trade and labour mobility by removing federal barriers to the interprovincial movement of goods and provision of services. A number of provincial governments entered into economic cooperation agreements to remove provincial barriers, such as the Economic cooperation memorandum of understanding: Ontario and Nova Scotia, and introduced related legislation aimed at creating free trade and labour mobility between provinces. So far, these initiatives have had yielded little benefit to those in the insurance industry.
• Divergent regulatory requirements among the provinces persist, particularly in relation to intermediary licensing (adjusters, agents, brokers, Managing General Agents (MGAs)). While some work has been done on this front (see, for example, the Principles for Adjuster Authorization During Natural Catastrophes and Disasters published by the Canadian Insurance Services Regulatory Organizations), political leadership and legislative changes will be needed to implement meaningful change.
• Looking forward to 2026, the federal Budget noted that the government has concluded negotiations and has reached an agreement in principle with provinces and territories on a Financial Services chapter for the Canada Free Trade Agreement.

Insurance Regulatory Changes

There were several changes introduced by Office of the Superintendent of Financial Institutions (OSFI) in 2025 applicable to insurers:

• In February, OSFI issued its final guideline on its approach to the capital and liquidity treatments of crypto-asset exposures. It came into effect in November 2025, or comes into effect January 2026, for federally regulated financial institutions (FRFIs) with a fiscal year end of October 31 or December 31, respectively. More details on the Capital and Liquidity Treatment of Crypto-asset Exposures (Insurance) Guideline, and its related guidelines concerning public disclosure of exposures to crypto assets, are available in our bulletin, Financial Services Update: OSFI Guidelines and Payments Canada Consultation.
• The scope of OSFI's Guideline E-23: Model Risk Management was expanded in September to capture risks from artificial intelligence and machine learning, as explained in our bulletin, OSFI Quarterly Release: Updates Issued for Capital Adequacy, Model Risk Management and Insurer Peer Review. Effective May 1, 2027, the updated guideline will apply to all FRFIs.
• Also in September, OSFI announced changes to Guideline E-15: Appointed Actuary: Legal Requirements, Qualifications and Peer Review, including removing duplicative content already in the Insurance Companies Act, and eliminating the requirement for peer review of an appointed actuary's work, which will take effect on January 1, 2027.
• In November, OSFI published its final Minimum Capital Test Guideline (2026), which comes into effect for insurance companies and Canadian branches of foreign P&C insurers on January 1, 2026. Additional details are available in our bulletin, OSFI Quarterly Release: Capital Changes and Other Updates.
• OSFI engaged in several climate risk activities with FRFIs in 2025. The federal Budget noted the government's plans to consult insurers and other interested stakeholders on ways to ensure the stability of Canada's insurance sector in extreme natural disaster events like earthquakes.
• Looking forward, the federal Budget proposed to "unlock capital" to support various 'nation building' initiatives. Its related Bill C-15 includes proposed amendments to modernize legislated limits on investments, to be replaced with OSFI guidance. In July 2025, OSFI announced lower capital requirements for life insurers making investments in Canadian infrastructure through debt or equity.

OSFI's Supervisory Approach

While the pace of new initiatives at the federal level has slowed, OSFI remain focussed on non-financial risks, with implementation dates for guidance in this area continuing to come into force, particularly for the Integrity and Security Guideline and Operational Risk Management and Operational Resilience Guideline.

• OSFI completed a review of its Supervisory Framework, which was effective as of April 1, 2024. As detailed in our November bulletin, OSFI Quarterly Release: Capital Changes and Other Updates, the new framework supports earlier OSFI intervention and FI risk management. OSFI plans several changes in 2026, particularly to address the 'weakest link' rating implications for its updated Overall Risk Rating (ORR).
• OSFI issued key changes to its administrative monetary penalties (AMPs) framework, with a lower tolerance for contraventions, such that penalties could be issued when OSFI determines lower levels of negligence and harm, as summarized in our bulletin, OSFI Quarterly Release: Updates Issued for Capital Adequacy, Model Risk Management and Insurer Peer Review. The revised approach is effective for violations that occur after September 11, 2025.

Provincial Changes Impacting Insurers

Several provinces introduced changes or possible changes to their regulatory frameworks:

• In January 2025 the Financial Services Regulatory Authority of Ontario (FSRA) released for consultation its proposed Rule 2025-001 – Life and Health Insurance Managing General Agents (First Consultation). In response, stakeholders raised a number of concerns, including: ambiguity in the regulated activities; redundant licensing for corporate agencies; excessive reliance on insurers for MGA compliance; and unclear "association" provisions. In October 2025, FSRA released a summary of the stakeholder feedback and a revised proposed Rule 2025-001 – Life and Health Insurance Managing General Agents (Second Consultation). The Second Consultation closed on November 19, 2025. FSRA is targeting June 1, 2026, as the implementation date for the new MGA licensing framework.
• Alberta's Bill 47, the Automobile Insurance Act, received Royal Assent on May 15, 2025, which lays the foundation for the government's new model for automobile insurance. It, has been described as a "care first" system and will shift Alberta's automobile insurance system to a no-fault model, limit lawsuits against at-fault drivers, and focus on providing improved medical, rehabilitation, and income support benefits. Draft regulations (the Permanent Injury Regulation) were released in October 2025. The Alberta Government is still targeting January 1, 2027, for implementation of the new system.
• The Alberta Automobile Insurance Rate Board (AIRB) issued a bulletin (Bulletin 08-2025) in October 2025, to advise insurers about recent amendments to the Automobile Insurance Premiums Regulation. While most of these amendments were technical in nature and/or were done in anticipation of the new "care first" system, they included changes to the definition of "rating program" granting authority to the AIRB to review and approve underwriting rules. As noted in the Bulletin, the AIRB is now requiring insurers to remove underwriting restrictions on the availability of "Section C" coverages (optional coverages that can include collision, comprehensive, etc.) prior to the approval of any further rate increase.
• Quebec's Bill 92, An Act to amend various provisions mainly with respect to the financial sector (the Act), was assented to on June 4, 2025. The Act makes several changes to Quebec's insurance regulatory framework, including: easing the rules for claims adjusters; reducing disclosure requirement for damage insurance brokers; providing the Autorité des marches financiers (AMF) with new powers around firm governance and management; and increasing the amount of administrative monetary penalties (up to $2,000,000 per day). More details are available in our bulletin Bill 92: New Omnibus Legislation is Changing the Regulatory Framework of Québec's Financial Sector.
• The AMF released its Draft Guideline for the Use of Artificial Intelligence in June 2025, which sets out its expectations for certain financial institutions (including insurers authorized in Quebec) on the use of artificial intelligence systems (AIS), including the lifecycle of an AIS, governance, management of the risks associated with AI, and fair treatment of clients.
• In November 2025, the Registered Insurance Brokers of Ontario (RIBO) launched a public consultation (Consulting on Enhancing RIBO's Supervisory Framework), on several proposals to enhance supervision, including: defining supervision, supervision standards for Principal Brokers, a licensee-to-supervisor ratio; geographic supervision, and limiting multi-firm Principal Brokers, with comments requested by January 31, 2026.
• As noted in last year's update, the British Columbia Financial Services Authority (Regulatory Statement) published guidance with respect to the underwriting, marketing, and sale of product warranty insurance, vehicle warranty insurance, and automobile insurance. It seems that vehicle manufacturers and motor vehicle dealers are underwriting and distributing insurance products in a manner that is not compliant with the requirements in British Columbia. Beginning in 2024 and throughout 2025 the BC Financial Services Authority (BCFSA) took enforcement action against a number of vehicle manufacturers and motor vehicle dealers (Insurance Decisions).
• In June 2025, the Alberta Superintendent of Insurance published an Interpretation Bulletin to all insurers providing private passenger vehicle (PPV) insurance in Alberta, which clarifies the application of the adverse contractual action provisions under the Insurance Act (Alberta) where a contract between an insurer and an insurance broker is terminated. Notably, when an insurer refuses to renew an insured's PPV insurance policy because it no longer conducts business with the insured's broker, this constitutes an adverse contractual action and is contrary tothe Act. Insurers that engage in such conduct could be subject to enforcement action, including administrative monetary penalties.
• There is still no update regarding the implementation of restricted licensing for the incidental sale of insurance by certain businesses in British Columbia. The consultation by the Government closed in October 2022 (Public consultation on restricted insurance agent licences) and the Insurance Council of British Columbia has been working on the development of a new licensing framework since 2023 (Restricted licensing framework update).

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.