Provincial insurance regulators look to improve oversight of advisors and MGAs

The Insurance Council of British Columbia (ICBC), for example, is considering changes to the supervisory model for newly licensed insurance advisors, said Rob Tanaka, director of policy and investigations at the ‎ICBC. In that province, advisors who have held a licence for less than two years must be supervised by another individual at their firm.

“The ideology behind that was mentorship,” Tanaka said. “We wanted to bring new people in, have someone oversee them, help direct them with their education, review applications.”

However, the ICBC has found that some new advisors are not being effectively supervised and, in many cases, the supervisors are overseeing dozens, or even hundreds, of advisors at once, he added.

“We’re not sure how a supervisor can effectively oversee, in a few situations, hundreds of agents,” Tanaka said. “We’re not sure it works.”

MGAs and insurance carriers have an important role to play in screening insurance advisors and monitoring their activity, and it’s critical that they fulfill that responsibility effectively, Tanaka added.

“MGAs and insurance companies are gatekeepers in the industry,” he said. “They can help to vet those [who come into] the industry.”

The ICBC is also considering changes to the continuing education (CE) requirements for new life insurance advisors, Tanaka said. Rather than allowing newly licensed advisors to choose their own courses to meet their CE requirements, he said the regulator is considering mandating more specific training for those advisors.

“For new entrants in our industry who complete the [life licence qualification program], they’re brand new, we don’t know that that’s the appropriate model, to let those individuals determine what education they can take,” Tanaka said. “We may contemplate in B.C. prescribing what that education looks like in the first three to five years, perhaps, for a new agent.”

In addition, he said the ICBC is considering new restrictions around the use of the financial planner and advisor titles.

“You have life insurance agents who are holding themselves out as financial advisors or financial planners when they don’t have the credentials to do that,” Tanaka said, noting that the regulator may soon update its guidance around the use of those titles.

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Oversight of insurance intermediaries is also a key, ongoing priority in Quebec, according to Louise Gauthier, senior director, distribution policies and compensation at the Autorité des marchés financiers (AMF). As part of that project, the regulator plans to begin gathering extensive information about the insurance distribution industry from firms and is developing a compliance guide for intermediaries.

The AMF is also considering outlining more specific regulatory responsibilities with respect to distribution, she said.

“We may want to develop policy proposals to clarify roles, powers and responsibilities in the distribution chain, and our expectations with regard to each player, from the advisor to his firm, the MGA, and the carrier,” Gauthier said.

The Insurance Councils of Saskatchewan (ICS), meanwhile, is in the process of implementing a new set of regulations, which includes a requirement for MGAs to hold a new type of licence.

Under the current rules across the country, MGAs are licensed as insurance agents. The new licensing category in Saskatchewan will help to clarify the responsibilities facing MGAs, said Ron Fullan, executive director at ICS.

“Anyone from the insurer down to the first level that touches the consumer is subject to oversight. So, as one of the players between the insurer and the consumer, clearly MGAs would fall in that category,” he said. “Rather than license MGAs as agents … it seemed prudent to our policymakers to create a licence for MGAs and then create requirements based on what MGAs do.”

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