Canada Deposit Insurance Corporation Overhauls Premium Categories

The Canada Deposit Insurance Corporation (CDIC) has proposed a new Differential Premiums By-law. The By-law aims to modernize the framework for determining premiums paid by member institutions, ensuring greater risk sensitivity and responsiveness to changes in the financial environment.
CDIC, a federal Crown corporation, provides deposit insurance and supports financial stability by resolving member institutions if they fail. Member institutions are classified into premium categories based on risk, with premiums determined by their classification and insured deposit volume. The proposed changes, effective April 1, 2025, result from a strategic review conducted between 2021 and 2023 and are intended to align the By-law with CDIC’s mandate and the evolving financial landscape.
Key changes include increasing the number of premium categories from four to five, introducing semi-annual classifications, revising qualitative and quantitative criteria, and updating policies for new member institutions. The semi-annual classification process will assess member institutions twice yearly, reflecting intra-year risk profile changes. Member institutions will submit financial data through fall and spring returns, which will form the basis for their quantitative and qualitative scores. Late submissions will result in the application of the highest premium category rate, and revised returns must address any discrepancies by July 2.
For new member institutions—those operating for less than two full premium years—the default classification will be Premium Category 2, unless intervention by the Office of the Superintendent of Financial Institutions (OSFI) prompts reclassification to the higher-risk Premium Category 3. Transitional provisions allow existing new members to remain in Premium Category 1 until they are no longer considered new, unless intervention occurs.
Quantitative scoring revisions include removing redundant metrics and introducing new ones to assess liquidity and funding risks. Metrics differ for domestic systemically important banks (D-SIBs) and smaller institutions, aligning with OSFI’s guidelines for small and medium-sized deposit-taking institutions. The qualitative scoring criteria will also change, replacing a five-point examiner’s rating scale with an eight-point scale and introducing a new Risk and Resolvability Score (RRS). The RRS evaluates CDIC’s internal risk assessment, data compliance, and, for D-SIBs, resolution plan adherence.
To calculate premiums, CDIC will average the rates determined in January and July classifications, applying a formula that accounts for insured deposit volume. The first premiums under this revised framework will apply to the 2027 premium year, with new processes and scorecards detailed in CDIC’s Differential Premiums Manual, updated ahead of the first return submission deadline of October 31, 2026.
By modernizing the framework and aligning it with evolving regulatory standards, CDIC seeks to strengthen its ability to protect depositors and uphold financial stability.
Canada (Proposed) January 17, 2025