CDIC moves to five premium categories

Summary#

The Canada Deposit Insurance Corporation (CDIC) is proposing changes to the Canada Deposit Insurance Corporation Differential Premiums By‑law. The main change is to move from four premium categories to five, and to update reporting and scoring rules for small institutions; the changes would take effect for the 2025 premium year (starting April 1, 2025).

What it does#

• Adds a fifth premium category so member institutions are split across five risk bands instead of four.
• Sets the new premium bands (each percentage is of the statutory maximum premium rate):
  • Category 1: total score ≥ 90 → 22.5%
  • Category 2: total score ≥ 80 and < 90 → 27%
  • Category 3: total score ≥ 65 and < 80 → 40.5%
  • Category 4: total score ≥ 50 and < 65 → 72.9%
  • Category 5: total score < 50 → 100%
• Reclassifies institutions that fail to file required data into premium category 5 for the period they are late.
• Changes how small institutions are handled:
  • Defines Category III SMSB (small and medium‑sized deposit‑taking institutions) and aligns the By‑law with the Office of the Superintendent of Financial Institutions (OSFI) guideline so some Category III SMSBs do not have to submit certain reports to CDIC.
  • Category III SMSBs get scores based on a smaller quantitative scale (a maximum of 45 points that are then converted to the standard scale).
• Updates technical reporting elements to match recent OSFI reporting (Basel Capital Adequacy Reporting) changes, for example changing certain credit conversion factors from 0% / 20% / 50% to 10% / 25% / 40%, and adjusting the Exposure at Default wording.
• The proposed changes are published for comment; if made final they would come into force for premium year beginning April 1, 2025.

Who's affected#

• CDIC’s member institutions — banks, credit unions and other deposit‑taking institutions that pay CDIC premiums — will be the direct users of the new rules. Bold name: Canada Deposit Insurance Corporation (first mention in this section).
• Smaller institutions covered by OSFI’s SMSB rules — Category III SMSBs — are affected because the rule clarifies which reports they must (or must not) submit and alters how their scores are calculated.
• The Office of the Superintendent of Financial Institutions (OSFI) is involved only as the source of the reporting standards CDIC is aligning with.
• The federal notice says small businesses generally will not be affected. It is otherwise unclear from the notice whether any specific classes of depositors or customers would feel direct effects.

Why it matters#

• The change to five categories is meant to create finer risk differentiation. That means some institutions may pay higher annual CDIC premiums and some may pay less, depending on their score under the new scale.
• Aligning CDIC’s reporting requirements with OSFI should reduce confusion and duplicate filings for smaller institutions and keep scoring based on the same data banks already provide.
• Putting late filers into the highest category (category 5) gives a clear penalty for not providing required data; that can raise costs for those institutions while they remain out of compliance.
• The proposal is not final yet. The Canada Gazette notice (published October 19, 2024) invited comments for 30 days, and the amendments would only take effect for the 2025 premium year if finalized.