In an examination of 50 life agents across 10 managing general agencies in Ontario in 2025 and 2026, the Financial Services Regulatory Authority of Ontario (FSRA) identified over 800 needs-based sales best practice issues within the 251 client files submitted.

“These issues were consistent across managing general agencies (MGAs), with at least 80 per cent of MGAs showing deficiencies across all five needs-based sales best practices,” the regulator states in its recent distribution report.

Dubbed the Insurer-MGA distribution and business practices observations report, the document notes that 66 per cent of agents did not properly complete client needs and suitability assessments. “FSRA found this issue at all 10 MGAs,” they write.

Additionally, 74 per cent failed to provide illustrations showing policy value projections and underlying assumptions, while 52 per cent did not follow advisor disclosure best practices.

Systemic gaps in agent sales practices

“Findings show systemic gaps in agent sales practices, signalling potential weak training, monitoring and supervision,” the report adds.

The results are based on the answers to the first phase of FSRA’s life and health MGA intelligence questionnaire, sent to eight insurers, representing approximately 65 per cent of the market, to better understand insurer-MGA relationships, product distribution, compliance, oversight and controls over delegated activities.

The next phase of the questionnaire will launch within this fiscal year, they add. “Insights will continue to inform FSRA’s licensing, policymaking, supervision and work with the Ministry of Finance on Ontario’s proposed licensing framework for MGAs,” FSRA stated in an announcement about the publication’s release.

Risk-based approach to supervision

“FSRA uses a risk-based approach to supervision, drawing on regulatory data, market intelligence and examination findings to identify potential consumer protection risks and prioritize its supervisory activities,” a FSRA representative added in an email exchange in response to the Insurance Portal’s questions. “Speaking of no entity or situation in particular, if FSRA identifies an entity to be putting consumers at higher risk of consumer harm, it focuses its supervision and resources to mitigate that risk.”

They add that the regulator’s observations in the report are consistent with findings identified through previous supervisory activities. “As identified in previous reports, the variability in insurer oversight continues to underscore the need for stronger oversight.”

Among the report’s findings:

  • FSRA found no correlation between the size of an insurer and the number of MGAs used. Participating insurers used between 10 and 300 MGAs to process their business in this channel. (FSRA notes that the term “MGA” used in its questionnaire “refers to the collective of entities that perform MGA delegated activities." This includes MGAs, sub-MGAs, associate general agents, national accounts, and third-party administrators.)
  • All insurers delegated recruiting, screening, training and monitoring of agents to MGAs in some form. Less than 75 per cent conducted formal reviews of their MGAs and agents.
  • Most participating insurers engaged at least one MGA operating a tiered-recruitment business model emphasizing rapid agent onboarding and agent-driven recruitment. “While not prohibited, tiered-recruitment model arrangements can introduce additional oversight challenges, particularly where multiple layers of recruitment and supervision are involved,” FSRA’s representative told the Insurance Portal. “Insurers are expected to ensure appropriate oversight of their distribution networks, regardless of the business model used.” The report adds that, in some cases, a sizable portion of business was generated through an MGA using this business model.
  • Just half of participating insurers had documented policies and procedures in place for supervising and monitoring delegated functions. Participating insurers also reported varying activities for monitoring and supervising MGAs and agents.

“Combined, the findings from the questionnaire and life agent examinations suggest that inconsistent oversight by insurers and MGAs may contribute to gaps in agent practices and consumer outcomes,” the report states.

Orphaned clients

In addition to a life agent supervision report expected to be released before the end of 2026, FSRA is also expected to undertake an orphaned clients thematic review in the coming year, the second phase of its intelligence questionnaire and a cross-sectoral recruitment practices sweep to better understand recruitment and screening practices and their potential impact on consumer outcomes.