Stephen Frank has issued a call to the entire industry: it’s crucial to engage in conversations with regulators to make it clear that, while there are similarities with mutual funds, life insurance is not the same as securities.
Frank, president and CEO of the Canadian Life and Health Insurance Association (CLHIA), delivered this message at Advocis’ Symposium 2025, held in March in Toronto. Advocis is the largest voluntary association of financial advisors in Canada.
Frank noted that the insurance industry had enjoyed a relatively calm relationship with regulators for the past 10 to 15 years, as most regulatory actions were focused on the securities side.
“But things have changed, Frank said, and now the big spotlight has shifted onto insurance.”
Regulators, he explained, are comfortable with the progress made on the securities side and now they want a similar oversight framework in life insurance.
Five to ten years in the future, the life insurance regulatory framework will likely resemble what we see today on the securities industry, says Frank.
“The trick for us,” he said, “is to continue to work with regulators and to make our case. That’s why organizations like Advocis are so important. We must keep working toward a framework that, while the outcome needs some similarities, the way we’re going to do it must be respectful and acknowledge that insurance is different.”
Frank acknowledged that regulators often push back against this idea. “They don’t like hearing me when I come in a room saying that we are different,” he said. “They don’t buy that narrative. But we still need to make our case.”
A key distinction he emphasized is that life insurance isn’t something consumers typically go out and buy – it’s something that needs to be sold. The sales process is entirely different from that of securities. In this context, banning certain types of compensation may make sense in the mutual fund world, but not in life insurance. “Still,” Frank stressed, “it’s up to the industry to prove that.”
Advisors have influence
Ali Ghiassi, vice-president of industry affairs and government relations at Canada Life, reiterated the importance of advisors’ advocacy efforts. “We’ve seen the difference when insurers speak to policy makers and regulators, compared to when advisors do. The influence isn’t the same, because advisors are rooted in communities – large and small – across Canada.”
Frank said discussions with regulators are still in the early stages, but industry stakeholders should expect momentum to build.
Principles-based regulation
“In insurance, we favour principles-based regulation, whereas the securities sector leans more toward rule-based, control-driven models.”
Now, says Frank, regulators are starting to talk of seg funds disclosure, and it will be a quite transparent and robust disclosure to clients. Then, the expectation for managing general agencies is going to change.
Phil Marsillo, president of the Canadian Association of Independent Life Brokerage Agencies (CAILBA) and President and CEO of IDC Worldsource Insurance Network, also sees change on the horizon. He says he has warned CAILBA members that they have a choice: wait for change to happen, or get involved in the conversation. “But we have to be honest,” he added. “Once the rules are in place, it’s much harder to change them.”
