In an effort to boost consumer protection, Ontario’s Finance ministry is proposing a number of changes to the way managing general agencies (MGAs) will be set up and operate in the life and health insurance industry.
The changes would create minimum licensing standards for MGAs, and give the Financial Services Regulatory Authority of Ontario (FSRA) rulemaking authority in this space.
The province has launched a consultation on the proposed changes.
Currently, MGAs aren’t specifically covered by provincial legislation, and recent reviews by FSRA have found evidence of “unfair consumer treatment resulting from poor conduct of some MGAs and their agents and some deficiencies in insurers’ oversight of MGAs,” the consultation paper noted.
At the same time, it noted that certain insurers and MGAs “have indicated that the current regulatory framework creates inconsistency and an uneven playing field among MGAs.”
In response, the Finance ministry is proposing to introduce a licensing regime “to create minimum professional standards, provide more regulatory certainty and enhance consumer confidence,” it said.
In an analysis accompanying the consultation, the government said the proposed creation of a licensing regime for life and health MGAs “will increase compliance requirements on all MGAs and, by extension, insurers.”
At the same time, the government suggested the adoption of a standard license will streamline compliance and lead to savings for insurers, MGAs and advisors/agents.
Finance said it will also consult with MGAs on the proposed licensing framework, and that it will work with FSRA to consult on its rules in this area “to minimize regulatory burden on MGAs, such as allowing an appropriate transition period.”
The deadline for responses to the consultation is Sept. 9.