Canada's 2025 budget bill proposes sweeping regulatory changes for insurers, including capital threshold increases, enhanced OSFI powers, and new fraud prevention mandates.
The Budget 2025 Implementation Act, No. 1 (Bill C-15), received first reading on November 18, 2025, proposes significant structural changes to federally regulated insurance companies through amendments to the Insurance Companies Act and related financial services legislation.
The proposed legislation would increase the equity threshold related to the public holding requirement from $2 billion to $4 billion, a move that would affect capital structure planning for mid-sized and growing insurance companies. This change appears in Division 13 of Part 5, alongside corresponding amendments to the Trust and Loan Companies Act and Bank Act.
Division 14 introduces some of the most consequential proposed changes for insurance operations. The amendments would clarify and expand the powers of the Office of the Superintendent of Financial Institutions (OSFI) in three key areas. First, the bill would clarify OSFI's powers in respect of the adherence by federally regulated financial institutions to their policies and procedures to protect themselves against threats to their integrity or security. Second, the Superintendent would receive powers to issue directions of compliance in respect of unsafe or unsound practices in the conduct of the affairs of those financial institutions. Third, the bill would provide that the Superintendent is not prevented from disclosing information to any federal government agency or body for purposes related to the Superintendent's regulation or supervision of financial institutions.
Division 11 would modernize prudential limits by repealing certain provisions that impose limits on federally regulated financial institutions with respect to debt obligations and borrowing, consumer and commercial loans and investments in real property and equity. Insurance companies would need to reassess their investment strategies and risk management frameworks in light of these removed constraints should the bill pass.
Division 16 proposes to mandate that institutions establish policies and procedures for detecting and preventing consumer-targeted fraud and mitigating its impacts. The proposed amendments would also require institutions and the Commissioner of the Financial Consumer Agency of Canada to prepare annual reports on consumer-targeted fraud.
The bill also addresses operational matters through Division 12, which would allow for the electronic delivery of certain documents to shareholders, members and policyholders without their consent, while ensuring that they receive paper copies if they request them.
Beyond insurance-specific provisions, Part 1's proposed amendments to the Income Tax Act include increasing the limit under the Lifetime Capital Gains Exemption so that it applies on up to $1.25 million of eligible capital gains, applicable to dispositions that occur on or after June 25, 2024, with indexation of the limit to resume in 2026.
Division 18's proposed amendments to the Special Economic Measures Act would authorize the Governor in Council to make regulations requiring financial institutions to provide to the Minister of Finance information on property that is in their possession or control and that is owned, held or controlled by a person, including a foreign state, identified under that Act and information on profits realized from such property. The Minister of Finance would also gain authority to make an order directing a financial institution to pay such profits to the Receiver General.
The cumulative effect of these proposed changes would demand immediate attention from insurance company executives, compliance officers, and legal teams as implementation timelines and regulatory guidance would emerge from OSFI and other federal authorities should the legislation pass.
