Principles-based regulation expectedBy Donna Glasgow | October 24 2010 07:04PM
Paul Brown, President and CEO of Worldsource Insurance Network and Chair of the Membership Committee of MGA association CAILBA, says he expects eventual regulation of the managing general agency channel to be principles-based.
Mr. Brown says he is fairly close to the ongoing regulatory review because of his role in CAILBA and from conversations he has had with some regulators. "I've got a pretty good idea of what's coming down and I think the regulation will obviously identify that the MGA is part of a process and will identify that the MGA does have some responsibilities. At the same time, I think it will be principles-based. It won't be an MFDA (Mutual Fund Dealer Association) type of regulation at all," he says, adding, "What I've seen so far is it won't be something that will be overly onerous for MGAs. It's really going to be a common sense approach to the distribution of insurance products."
Could there be benefits to regulating MGAs? "I think it is absolutely a benefit to us. CAILBA is already taking the initiative to prepare its members for the new reality of a more regulated environment. I think is going to benefit everyone."
CAILBA is more and more active in the industry, he adds. "It's just a sign of the times. The MGA distribution system is now on the radar. It's recognized as the leading distribution channel in the individual life and health insurance business and with the increase of regulation in the financial services industry...there's a lot of educating going on right now about what an MGA is, and what they do, and the part they play in the distribution of the products."
CAILBA, he adds, has had a lot of success recruiting new members in the last 12 months. I think it's primarily the recognition that we, as a significant part of the industry, need to have a common voice. We're not just competitors. Our common interests probably outweigh our competitive differences."
Meanwhile, Quebec MGAs have seen their association disband due to a lack of interest in working together. Is CAILBA seeking to fill the void? Mr. Brown says CAILBA is interested. "One of our strategies is to attract as many of the significant Quebec MGAs as we can." This strategy is in its preliminary stages, he added. Although the Quebec business environment is different, particularly with respect to regulation, there are many issues that are the same across the country. "We have a lot of common ground."