Regulation 1408

In finding that an insurer could deduct a reserve computed by actuaries respecting a class action suit brought against it, the Directorate stated:

[T]he fundamental issue is whether the amount of the class action reserve including settlement expenses relates to policies in respect of claims reported before the year end as a result of which the insurer may be required to make a payment or incur an expense after the year. …

We are of the view that the amount of the class action provision relates to policies in the context of claims since it is by virtue of the rights arising from the XXXXXXXXXX insurance policies that the insureds who suffered a loss were able to bring the class action.

Based on the information you have provided, the reported reserve as defined in subsection 1408(1) of the Regulations would include the class action reserve. In addition, as that amount is calculated in accordance with the accepted actuarial practice of the Canadian Institute of Actuaries, we are of the view that that amount could be included in the "claims liability" if it represents the present value, calculated at the interest rate appropriate in the circumstances, of an amount that represents a reasonable estimate, made in accordance with accepted actuarial standards.