The results are in, and the Financial Services Regulatory Authority of Ontario (FSRA) has reviewed and considered more than 30 stakeholder submissions, letters and comments received in response to its proposed new rule for Life & Health (L&H) Managing General Agents (MGAs) in Ontario.
The revised rule stems from late 2024 when the Government of Ontario introduced amendments to the Insurance Act to create a separate licensing class for life and health MGAs in Ontario.
FSRA, in a recent national webinar, presented a summary of the proposed new MGA rule, along with proposed FSRA fee rule amendments, which will provide a brand new licencing/regulatory format for L&H MGAs in Ontario.
A key priority
Work on those two rules, which are designed to strengthen the market conduct regulation and supervision of intermediaries, including MGAs, is a key priority for FSRA in its 2025-26 fiscal year, said Tim Miflin, acting director of policy for the Market Conduct branch, who acted as the moderator.
The proposed MGA rule was first published in January 2025. An initial consultation and review, which closed April 30, resulted in a revised rule, which was under consideration at the time of the FSRA presentation, and closed on November 19. The first consultation for the fee rule remains open and is scheduled to close on December 19.
Upon conclusion of the final consultation period, FSRA will review the feedback of comments received and consider finalizing the rules for submission to the Minister of Finance, said Miflin.
“FSRA’s revised MGA rule is intended to strengthen the oversight of MGAs and insurance agents and further protect consumers by helping to correct troubling practices identified by FSRA’s supervision work in the sector,” said Miflin. “This includes shortfalls and gaps relating to agent screening, training and monitoring. The rule would require agents to be well trained and properly supervised across the sector, which would help ensure consumers are treated fairly,” he added.
FSRA also wants to make sure the requirements are clear and achievable, for both large and small organizations, and that “the costs of compliance do not outweigh the consumer protection benefits,” said Miflin.
Other key outcomes that FSRA is trying to achieve include: avoiding, as much as possible, creating a disproportionate competitive advantage with other distribution channels; and minimizing the potential for unintended market disruptions which could negatively impact consumer access to advice and services, he added.
Tiers of licenced MGAs
Several important changes were made to the revised rule as a result of stakeholder feedback during the first round of consultations which, for example, expressed concerns that a one-size-fits-all approach could impose a financial burden, particularly on smaller and mid-sized organizations, said Miflin.
The revised rule introduced three tiers of licensed MGAs, each with distinct obligations. For example, Tier 1 MGAs, who facilitate the sale of individual life insurance, recruit, screen, train, or monitor agents and perform such activities pursuant to an insurer, will have higher obligations placed on them, he noted.
Tier 2 MGAs have similar obligations as Tier 1 MGAs, but do not operate pursuant to an agreement with an insurer. Tier 3 MGAs are those that do not fall into either of the Tier 1 or Tier 2 categories, said Miflin.
Panelist Yovanka McBean, director of licensing at FSRA, said that while all tiers of MGAs will be required to have a designated compliance representative (DCR), the eligibility of, and duties associated with the DCR will depend on which tier level the MGA is.
For example, a DCR for a Tier 1 or Tier 2 MGA must have the appropriate knowledge to be able to perform their duties, which include, but are not limited to implementing, monitoring and periodically updating the MGA’s compliance system, she explained.
McBean added that all life and health MGAs must maintain, in an amount reasonable with regards to its size, complexity, operations and the risk profile, both general liability insurance and errors and omissions insurance.
Miflin said the revised rule maintains that insurance companies are accountable for maintaining reasonable compliance systems, overseeing agents throughout the distribution chain, and providing greater detailed clarity on the delegation of certain activities, if specific requirements and conditions have been met.
For example, he noted, an insurer is permitted to delegate certain agent training responsibilities to a Tier 1 MGA if that insurer has a reasonably designed system capable of ensuring it can properly handle those responsibilities.
A critical gatekeeping function
Screening is a critical gatekeeping function that, under the revised rule, requires insurers to maintain a system to assess each prospective agent's ability before they can be authorized to act as an agent. An insurer can delegate screening to a Tier 1 MGA if that MGA has an adequate screening process in place. An exception occurs where an insurer is sponsoring an agent application, in which case the insurer cannot delegate to that Tier 1 MGA, said Miflin.
Insurers cannot delegate screening responsibilities to Tier 2 or Tier 3 MGAs, he added.
With respect to training, insurers must develop clear and accurate training materials covering details that include product features, cost, terms, conditions and exclusions. Training materials must be provided to all associated MGAs and agents, and insurers are responsible for ensuring agents complete the training, and understand its products and applicable laws, Miflin said.
Insurers cannot delegate the creation of training materials to any L&H MGA, nor can they delegate any training activities to Tier 2 or Tier 3 MGAs, he noted.
In terms of compliance, each insurer must have a system in place to oversee agents acting on their behalf to ensure they comply with applicable insurance laws. They are also required to report unsuitable agents to FSRA and take appropriate corrective action. Insurers also need to monitor data related to agent conduct to detect patterns of non-compliance that can result in consumer harm, said Miflin.
Insurers must have a client continuity plan in place “to ensure clients continue to receive services from agents if a Tier 1 MGA can no longer provide these monitoring and screening activities. The same requirement applies to a Tier 1 MGA in the event a Tier 2 MGA or Tier 3 MGA associated with the Tier 1 MGA is no longer able to provide this service,” Miflin explained.
Agents can only be licensed by FSRA if they have completed the training required in the revised rule, and they must be authorized by an insurer to sell their insurance product.
Phased-in fee structure
Panelist Andrea Foy, senior manager of FSRA’s Licensing and Title Protection Policy team, said the fee structure to support the L&H MGA licensing framework will be established through amendments to FSRA’s existing fee rule and that these will align with FSRA’s functioning as an independent, self-funded regulator.
“As with all its fees, in designing the fee structure, FSRA considers principles such as consistency, transparency and fairness,” she said. Moreover, “as we move forward, and in assigning fees to the sector, FSRA will take a measured approach which will not only limit costs and spread them out over time but also allow the sector time to mature and to incorporate the new regulatory expectations into their business operations,” Foy added.
As FSRA does not currently have sufficient information to move forward with a complete fee structure, it is taking a two-phased approach. Phase 1, currently being considered during the consulting process, is an amendment to the FSRA fee rule to introduce a licensing application fee that will come into effect June 1, 2026. Phase 2 will involve a subsequent amendment to the FSRA fee rule that will establish other fees, such as a renewal fee to “support the recovery of our startup and ongoing costs after the transition period,” said Foy.
This phased approach will provide FSRA time to gather the information necessary to develop an appropriate structure to support the collection of the necessary data, she added.
“For example, we're asking questions like, ‘How many MGAs are out there? How might they be broken down by the proposed tiers?’ as well as ‘What might be an appropriate way to allocate costs across the sector?’ Assuming that we move forward with a two-year transition period, we aim to communicate additional details on the fees under Phase 2 in fiscal year ‘27-28,” she elaborated.
Phase 1 of this approach has proposed a licensing application fee of $1,000, a non-refundable one-time payment when an application is submitted to cover the review of that application. Any fees to be paid in the future, such as a renewal fee, will be determined as part of Phase 2, said Foy.
Advocis, CALU express concerns
Advocis and the Conference for Advanced Life Underwriting (CALU) have expressed concern in a joint press release that the proposed new L&H MGA rule in Ontario could “unintentionally increase costs for consumers and place undue burden on small advisory businesses.”
They elaborated that “the proposed rule could impose new licensing fees and renewal costs on thousands of incorporated advisors and small agencies who are already fully licensed and supervised. These added costs have the potential to create a triple licensing regime with no clear consumer benefit.”
Advocis and CALU also say that the proposed rule has an overbroad scope that could capture too broad a group of industry practitioners than originally anticipated; and that it imposes unclear obligations with “overlapping requirements under different tiers.”
In addition, the organizations allege that FSRA’s proposal is not harmonized with existing MGA rules in Saskatchewan and New Brunswick, creating “a patchwork of rules” that will put Ontario advisors at a disadvantage.
Advocis and CALU call for coordination with other provinces “to avoid further regulatory deharmonization,” and a longer consultation timeline, in addition to other requests impacting the language of the proposed rule changes in Ontario.
The new licensing framework for L&H MGAs is being targeted for implementation by June 1, 2026, according to Ontario’s 2025 budget.
