CDIC expands premium categories to five

Summary#

The federal insurance agency Canada Deposit Insurance Corporation (CDIC) is proposing changes to the Canada Deposit Insurance Corporation Differential Premiums By-law. The proposal would expand the number of premium categories from 4 to 5, update some reporting language to match Office of the Superintendent of Financial Institutions (OSFI) rules, and take effect for the premium year beginning April 1, 2025.

What it does#

• Adds a fifth premium category and resets how member institutions are grouped by risk.
  • Premium category cutoffs and rates (expressed as a share of the statutory maximum premium rate, which is 1/3 of 1%):
    • 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%
  • (The Gazette item shows illustrative basis-point equivalents: 7.5, 9, 13.5, 24.3, and 33.3 basis points.)
• Changes how missing or late data affect classification: institutions that fail to provide required documents will be placed in premium category 5 (instead of 4) while late.
• Clarifies treatment of small institutions under OSFI’s rules: a Category III SMSB (small and medium-sized deposit‑taking institution)
  • does not have to submit certain financial items to CDIC, and
  • receives quantitative scoring out of 45 points (rather than 60), with that 45‑point score proportionally converted to the 60‑point scale by multiplying by one and one‑third.
• Updates technical wording and numeric fields so reporting lines match OSFI’s Basel Capital Adequacy Reporting (BCAR) returns. These are mainly wording and numeric alignments, not new policy.
• This is a proposed by-law. Interested people may comment within 30 days after publication (the notice was published October 19, 2024).

Who's affected#

• CDIC member institutions — that is, banks and other deposit‑taking institutions that pay CDIC premiums.
• Small and medium deposit‑taking institutions in particular: Category III SMSBs will see relaxed filing requirements and a special scoring approach.
• Depositors are affected indirectly because how premiums are set affects the fees institutions pay into the deposit insurance system.
• The source says the proposal does not affect small businesses directly and that some institutions will pay more while others pay less under the new five‑category system.

Why it matters#

• The change aims to make premium charges more closely match each institution’s risk. That could shift who pays more or less for deposit insurance.
• Small institutions classified as Category III SMSBs may have less paperwork to send to CDIC and a scoring method tailored to their reporting scope.
• Aligning CDIC’s by-law with OSFI reporting forms reduces confusion for banks and helps CDIC get consistent data.
• The proposal is not yet law. If adopted, it would apply for the premium year starting April 1, 2025, and comments were invited for 30 days after the October 19, 2024 publication.