A recent policy change by Dundee Wealth Inc. that funnels all new life insurance business through its own agency, Dundee Insurance Agency Ltd., has insurance brokers “outraged,” according to the Independent Financial Brokers.

IFB, which represents about 4,000 life insurance and mutual fund advisors across Canada, has surveyed members to gauge their stance on the Dundee move.

According to IFB’s executive director, John Whaley, members are concerned that the move represents a return to the old “captive agency” system, and a trend toward the adoption of “the MFDA model of heavy-handed governance within the life insurance industry.”

IFB is working to develop a roadmap to protect the independent distribution channel that it calls integral to a healthy life insurance industry in Canada.

“IFB has long been vocal in its opposition to the intrusive and prescriptive approach that the MFDA has taken with the mutual fund side of the business; we, and the members we represent, feel very strongly that this model has no place in the life insurance industry,” said Whaley in a statement.

According to the IFB survey results, brokers are not prepared to place all their business through a single MGA. Many indicated they would switch MGAs or quit the business if their MGA followed the Dundee model.

The majority of respondents said they currently do business with at least two MGAs. Most said they believe offering the products of multiple carriers is beneficial to clients, allowing them to choose the product that best meets their needs, rather the best available from a narrow selection.

“Brokers need assurance that their MGA won’t try to turn them into captive agents, and they need alternatives if and when that situation does arise,” said Whaley.

IFB plans to compile a national database of MGAs that are committed to supporting independence and willing to make that commitment to brokers.

IE