Insurance regulators have published a paper examining regulatory issues that emerge from the growth of the life insurance industry’s managing general agency model.

The paper, published Wednesday by the Agencies Regulation Committee of the Canadian Council of Insurance Regulators, documents the committee’s understanding of the growth of the MGA distribution model in the Canadian life insurance industry, and the possible regulatory implications.

The paper says that the shift from the career agency model to the MGA model “may have created a number of risks to consumers and gaps in regulatory regimes”.

The paper seeks comment on several issues, including outsourcing to MGAs, rep supervision, managing conflicts of interest, the role of MGAs in sales transactions and complaint handling, compliance with privacy legislation, and oversight of MGAs.

“Once these issues are clarified, ARC will be in a better position to determine if the changes to the life insurance industry resulting from the growth of the MGA distribution model are significant enough that the regulatory framework must change so that the regulatory goals of fair treatment of consumers and compliance with laws can be met,” the paper says.

The paper is out for comment until April 8.

IE