The Financial Services Regulatory Authority of Ontario (FSRA) is in the final stretch of its proposed licensing framework for Managing General Agencies (MGAs) in life and health insurance. The regulator’s consultation process has sparked a broad spectrum of responses.

FSRA is currently reviewing some 27 submissions on Proposed Rule 2025-001 – Life and Health Insurance Managing General Agents. The consultation period ended on April 30, 2025. In its notice of the proposed rule, the regulator outlines which distributors would be required to obtain an MGA licence, namely companies that recruit, train, or pre-screen advisors, as well as those that supervise or monitor their activities.

The rule could be extended to other types of distributors if they perform MGA-like functions. FSRA’s notice includes delegated MGAs—also known in industry terms as associate MGAs—along with national accounts (distributors affiliated with investment dealer firms) and third-party administrators, many of whom operate in group benefits and travel insurance.

Proposed Rule 2025-001 sets out eligibility criteria for obtaining a licence. Applicants would be required to carry liability insurance, and either errors and omissions insurance or a surety bond. They would also need to maintain a mailing address in Ontario and designate a person responsible for compliance.

According to the proposed rule, insurers would remain ultimately accountable for the impact of all consumer-facing activities, regardless of the distribution channel, FSRA writes.

If adopted as is, the rule would require insurers to oversee and supervise MGAs, while MGAs would be responsible for supervising advisors. FSRA expects insurers to implement a verification system to ensure that advisors remain compliant.

Broad participation

FSRA’s initiative drew responses from virtually every segment of the industry.

Major associations weighed in, including the Canadian Association of Independent Life Brokerage Agencies (CAILBA), the Canadian Life and Health Insurance Association (CLHIA), and Advocis.

Groups from the group insurance and travel insurance sectors also responded, such as the Third Party Administrators’ Association of Canada (TPAAC) and the Travel Health Insurance Association of Canada (THiA).

Insurers, MGAs, and individual advisors also submitted feedback.

A consumer advisory committee, the Consumer Advisory Panel to FSRA, also participated in the consultation.

Lack of clarity

In their submissions, MGAs and insurers called on the regulator to clarify elements of the proposed licensing rule. Insurers expressed concern over potential duplication of responsibilities. MGAs, meanwhile, voiced concern that insurers might shift oversight duties onto them.

We are concerned about the vague nature of certain requirements
– IFB 

Independent Financial Brokers of Canada (IFB), a group representing some 2,000 advisors in the Greater Toronto Area, summed up the MGAs’ concerns in its submission. “We are concerned about the vague nature of certain requirements in the proposed rule, and about the risk that life insurers may offload their supervisory responsibilities onto MGAs, when it is the insurer’s role to provide that oversight,” the submission reads.

The current draft of the rule does not clearly define the allocation of roles and responsibilities
– CAILBA 

For its part, CAILBA urged FSRA to define the obligations of each party more clearly. “The current draft of the rule does not clearly define the allocation of roles and responsibilities between FSRA and insurers in supervising MGAs,” the association wrote.

On the issue of advisor oversight, CAILBA believes certain tasks should fall to insurers—such as training advisors on their products, strategies, and client knowledge requirements.

CAILBA adds that MGAs should be responsible for supervising and monitoring advisor compliance and providing appropriate training, while market conduct monitoring and oversight should be conducted “in a shared capacity.”

IFB acknowledged that the regulator is outlining how insurers and MGAs should share responsibility for advisor supervision and compliance—while flagging a key concern. “There is a risk that insurers will rely too heavily on MGAs to meet their supervisory obligations. It is crucial to clearly define the responsibilities of both parties to avoid ambiguity and ensure that insurers are held accountable for the actions of their advisors,” the submission states.

Quebec regulator's vision

In parallel with the MGA licensing consultation, FSRA is conducting other fieldwork. To identify additional risks and set surveillance priorities, the regulator issued a questionnaire to a select group of insurers about their practices.

In Quebec, the Autorité des marchés financiers (AMF) does not plan to require MGA licensing, according to Louise Gauthier, Senior Director of Distribution Oversight Policy at the AMF, speaking at CAILBA’s 2025 Annual Conference held in Montreal from April 30 to May 2. She explained that “MGAs are already registered as firms in Quebec.”

Gauthier noted, however, that the Quebec regulator believes it is necessary to clarify the roles and obligations of MGAs. She reminded attendees that the AMF has been working for some time on a governance framework for firms. “We’ve had discussions with the industry throughout the year,” said the Senior Director of Distribution Oversight Policy.

Gauthier added that the regulator will also look at the distinction between independent representatives and firms within the Quebec model.