The Financial Services Regulatory Authority of Ontario (FSRA) has published its annual report on the regulator’s efforts to supervise life and health insurance agents in the province, along with its supervision plan for the year ahead.

The report calls for insurers to improve agent oversight. In 2023, they say over 80 per cent of individual life insurance policies in Canada were purchased through a life agent.

“We expect industry participants to strengthen oversight, improve reporting accuracy, properly train and monitor agents. We firmly believe that consumer protection is a shared responsibility between FSRA and the industry,” Erica Hiemstra, head of insurance conduct at FSRA said in a statement.

High risk agents 

In the 2024-2025 fiscal year, the regulator’s life agent unit commenced evaluations of 163 life agents, resulting in 77 examinations, a 16 per cent decrease. They add that 153 evaluations were commenced because the life agents in question were identified through FSRA’s Life Agent Misconduct Report (LAMR) filing process as being high risk agents. 

In total, the regulator reviewed 176 LAMRs after receiving multiple LAMRs for 17 life agents. Among the life agents reviewed, 25 per cent were part-time agents and 52 per cent remain licensed today. They add that 31 per cent of those reported held a license for less than five years, 26 per cent held a license for more than five years and 11 per cent were licensed for more than 20 years.

Among the trends identified, FSRA says examinations found 45 per cent of those being reviewed did not apply needs-based sales practices to help identify appropriate products, 46 per cent failed to complete product illustrations, 32 per cent did not provide complete advisor disclosures, 16 per cent did not issue reasons why letters and 32 per cent failed to maintain meeting notes. They add that 66 per cent are likely not adhering to certain aspects of their PIPEDA (Personal Information Protection and Electronic Documents Act) and FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) obligations.

The report further notes additional industry trends that include policy conversions from employer-sponsored group investment or pension plans into an insurers’ investment products without obtaining client consent. “These actions were often motivated by bonuses,” they note. “This trend tends to occur where client consent verification systems are weak or absent.” 

Point-of-sale controls 

Fake customers and the use of false client information was also noted as a problem. “FSRA urges insurers to proactively review their distribution arrangements and strengthen life agent oversight. Insurers should implement point-of-sale controls to prevent issuing policies to face customers or based on false information,” they state.

Fronting, that is allowing unlicensed individuals to conduct sales on behalf of other licensed life agents who were not involved in the sale, was also noted as being contrary to regulatory expectations. “While changes to the life agent of record during the policy term are permitted under certain circumstances, misrepresenting the original sale process remains a concern.”

Finally, borrowing from clients was also noted as a concern. “Many of the life agents (involved) held multiple financial services licenses,” they note adding that supervision trends seen through examinations and LAMRs closely aligned with those identified through its consumer complaints process. 

“With more than 60,000 life licensed agents in Ontario, FSRA is calling on industry to correct these practices which do not serve consumers’ interests,” the report states.

Entitled Life and Health Insurance Agent: 2024-25 Supervision Report and 2025-26 Supervision Plan, the report further examines the problem of life agents switching firms after termination. Of the 57 life agents who had sponsorship when they were reported, 51 per cent transferred their sponsorship during the sponsorship period: 77 per cent transferred once, 17 per cent transferred twice and two life agents transferred three times. As of March 31, 2025, 22 per cent of those agents remain sponsored and authorised to sell. The regulator says it will implement new processes to monitor sponsorship transfers in 2025 and 2026.

“In 2025-2026, FSRA will monitor the movement of over 200 life agents identified through the LAMR program since 2023, with a particular focus on those that are sponsored. FSRA will report the aggregate data on these movements,” they write.

Business practice compliance questionnaire 

It also intends to pilot the use of a business practice compliance questionnaire, a supervisory attestation tool it intends to use with some life agents who were previously the subject of a LAMR or thematic review.

Finally, in preparation for the upcoming new life and health managing general agency (MGA) regulatory framework, the regulator further urges the industry to review business practices. It does not get into further details about what the framework might entail.

“In 2024-2025, over 80 per cent of LAMRs involved life agents contracted with MGAs,” they write. “FSRA is prioritizing examinations of these life agents.”