OSFI Tells Canadian P&C and Mortgage Insurers Q4 Filings Stay the Same, Then IFRS 18 Returns Start in Q1 2027, and the Final 2027 MICAT Cuts the Low-Rise Housing Risk Weight to 130%

Canada's federal financial regulator has sent two letters to the insurers it supervises that, taken together, set the reporting calendar for the next year. The Office of the Superintendent of Financial Institutions, known as OSFI, wrote on October 22, 2026 to the chief executives and chief agents of federally regulated property and casualty insurers and Canadian branches of foreign insurers, and separately to mortgage insurers. Insurance Business Canada reported both letters on October 23, 2026. The core message in each is that the fourth quarter of 2026 will be a quiet one, in the sense that no changes are made to the forms insurers file, followed by a larger change in 2027 when the reporting standard IFRS 18 begins to apply.

For property and casualty insurers, the letter covers OSFI's forms and those of the Canadian Council of Insurance Regulators for 2026-27. The Q4 2026 returns that stay as they are include PC1, the core financial quarterly return; PC2 and PC3, the supervisory quarterly and annual returns; and PCPROV, the provincial return. From Q1 2027, all four are updated for IFRS 18. OSFI has already posted the updated returns, instructions and supporting documents on its website, and a summary of changes is in Section VI of the instructions. The PC4 return, which covers the quarterly Minimum Capital Test and the Branch Adequacy of Assets Test, is not changing for Q4 2026 or for Q1 2027. Validation rule updates will be posted in OSFI's regulatory reporting system when they are available, so insurers cannot yet test every check against the new forms.

IFRS 18 is the accounting standard that replaces IAS 1 for annual reporting periods starting on or after January 1, 2027. According to OSFI, as summarised in the coverage, it sorts the profit or loss statement into operating, investing and financing categories. The mortgage insurer article adds that the standard changes how results are presented and disclosed, not how assets or liabilities are measured. That distinction matters: the amount of capital an insurer holds, its reserves and its reported claims do not change because of IFRS 18, but the layout of its income statement does, and so do the totals that appear on regulatory returns. OSFI says its supervisory analysis will not change materially. The coverage does not describe the line-by-line changes, which are in the instructions on OSFI's website.

Timing depends on the financial year end. Companies with a December year end begin filing the IFRS 18 versions in Q1 2027. Those with an October year end stay on the current returns through 2026-27 and switch for the Q1 2027-28 filing period, using the 2026 version of PC4 for Q1 2026-27. For mortgage insurers, the letter says the updated returns take effect on January 1, 2027 for December 31 year-end companies and on November 1, 2027 for October 31 year-end companies. The article notes that, during parts of 2027, insurers may therefore be filing under different layouts depending on their year end, which creates a coordination task for groups with subsidiaries that have different year ends. Calendar-year insurers close 2026 on the old layouts and have one quarter to dry-run the new returns before they are due.

The mortgage insurers' letter has a few additional elements. It is signed by OSFI's chief data officer, Andrew Miller, and says the Q4 2026 filings stay on current forms. The four regular returns that change from Q1 2027 because of IFRS 18 are MI3, the core financial quarterly return; MI4 and MI5, the supervisory quarterly and annual returns; and MIPROV, the provincial return. The MICAT capital return and its filing instructions are also changing, although the letter, as reported, does not say what changes inside the return. Insurance Business reported in September that OSFI had finalised the IFRS 18 return templates.

The change with a direct effect on capital concerns the final 2027 MICAT guideline, which is the capital framework for mortgage insurers. According to the article, it adds a category for low-rise multi-unit residential construction, defined as projects of under seven storeys and 200 units, and lowers the base risk weight from 150 per cent to 130 per cent. High-rise projects stay at 150 per cent, and the change takes effect on January 1, 2027. A risk weight sets how much capital an insurer must hold per dollar of exposure, so, as a simple illustration, a $100 million exposure carrying a 150 per cent weight counts as $150 million of risk-weighted assets, while at 130 per cent it counts as $130 million. The coverage does not state the size of the exposures to which the new category would apply, so the aggregate effect on mortgage insurers' capital is not known from these reports.

For insurers, the practical tasks are clear. Reporting teams should plan the switch now, keep current forms for Q4 2026, and use the IFRS 18 versions from the start date that matches their year end. Questions go to the company's lead supervisor at OSFI or to the returns administration team for help completing or filing. Brokers and investors are less directly affected, although analysts comparing insurers' results across 2027 will need to be aware that the presentation of the income statement is changing and that the first comparable periods will carry both layouts.

What to watch is the posting of validation rules, any further guidance from OSFI on the presentation of insurance contract results under IFRS 18, and the way mortgage insurers describe the effect of the 130 per cent risk weight in their capital disclosures. Regulatory change is often incremental, and these letters confirm the sequence: a quiet quarter, then new returns, with the capital effects flowing mainly through the MICAT guideline.