1. What is deposit insurance premium?
Deposit insurance premium is a fee that a credit union pays annually to the Deposit Insurance Reserve Fund (“DIRF”). The DIRF is used for deposit insurance payouts in the event that a credit union does not have sufficient funds at the time of its failure.
2. How is a credit union’s annual deposit insurance premium determined?
A credit union’s annual premium is determined in accordance with section 105 of Ontario Regulation 237/09 made under the Credit Unions and Caisses Populaires Act, 1994 (the Act) and the rules set out in the Differential Premium Score Determination published by the Authority in The Ontario Gazette.
The annual premium payable is calculated by using the Differential Premium Score (DPS) to determine a credit union’s annual premium rate and applying the rate to its insured deposits.
3. How is the differential premium score (DPS) calculated?
The differential premium score of a credit union is calculated with reference to:
- Capital: the level of regulatory capital of the credit union; and
- Corporate governance: the effectiveness of the corporate governance practices of the credit union as determined with reference to the Act and the Authority’s by-laws and rules.
The maximum DPS attainable is 100 points. Capital and corporate governance are assessed using information filed via the credit union’s Annual Information Return (AIR). When a credit union does not file its AIR, the credit union will be assigned a score of 0 points.
4. How is the annual premium rate determined?
A credit union’s annual premium rate for a financial year that begins on or after January 1, 2020 is determined as follows:
- If the DPS of a credit union is 90 or over, annual premium rate = $0.75 per $1,000 of insured deposits.
- If the DPS of a credit union is 0, annual premium rate = $2.25 per $1,000 of insured deposits.
- If the DPS of a credit union is between 0 and 90, annual premium rate = 0.75 x ($1.75 - (DPS/90) x $0.75)) per $1,000 of insured deposits.
5. When should the Annual Information Return be filed?
The AIR is expected to be filed by a credit union within 75 days after its fiscal year end.
6. When is a credit union’s annual premium invoice issued by FSRA and when is payment due?
A credit union’s deposit insurance premium invoice is issued within 90 days after the credit union’s fiscal year end. The invoice is payable within 30 days after the invoice date.
7. What are included in the invoice package?
A cover letter, a DPS scorecard, the invoice, and a remittance copy of the invoice are included in the invoice package.
8. Will interest be charged if the premium invoice is overdue?
FSRA may charge interest at a rate equal to the rate prescribed under subsection 161 (1) of the Income Tax Act (Canada) plus 2 percent on the unpaid amount of the invoice.
9. Whom do I contact if I have questions about my invoice or require more information about deposit insurance premiums?
You may contact your risk analyst at FSRA for invoice related questions, or your relationship manager if you require more information about deposit insurance premiums.