The Ontario Ministry of Finance is proposing Insurance Act amendments that create licensing requirements for managing general agencies (MGAs).
This move follows reviews by the Financial Services Regulatory Authority of Ontario (FSRA) and by the Canadian Council of Insurance Regulators (CCIR) that identified compliance issues in the life and health insurance MGA sector, including that certain MGAs used tiered-recruitment business models which caused significant issues related to how products in Ontario are distributed in some cases.
Minimum standards
The changes to the regulatory framework include creating minimum standards through a dedicated licensing class for life and health MGAs and entities that perform insurer-delegated activities. They also give FSRA new rule-making authority needed to license and supervise MGAs. The proposed changes also clarify the duties of insurers, MGAs and agents.
“Reviews undertaken by FSRA and regulatory partners found evidence of unfair consumer treatment resulting from poor conduct of some life and health MGAs and their agents and some deficiencies in insurers’ oversight,” the consultation documents state. “Consequently, the Ministry of Finance is proposing to introduce a life and health MGA licensing regime to create minimum professional standards, provide more regulatory certainty and enhance consumer confidence. We invite interested businesses and individuals to share their feedback.”
Consultation on the proposed changes closes on September 9.
