Act
Proposed Life and Health Managing General Agent Legislative Framework in Ontario
Regulation Number(s):
N/A
Instrument Type:
Act
Bill or Act:
Proposed legislative amendments to the Insurance Act, 1990
Summary of Proposal:
Life and health managing general agents (L&H MGAs) are independent distribution intermediaries which perform certain activities for life and health insurers, such as recruiting, screening and training agents. Currently, the Insurance Act does not specifically regulate L&H MGAs or third parties and their role in performing delegated activities for insurers.
The Ministry of Finance (MOF) is consulting on proposed legislative amendments to the Insurance Act to modernize the legislative framework and strengthen consumer protection in today's distribution network in Ontario. These changes include:
1. Creating minimum standards through a dedicated licensing class for life and health managing general agents (L&H MGAs) and entities that perform delegated L&H MGA activities;
2. Providing the Financial Services Regulatory Authority of Ontario (FSRA) with a new rule-making authority to license L&H MGAs and entities that perform the same activities, and
3. Clarifying the duties of insurers, L&H MGAs and agents.
Respondents should review the consultation paper in conjunction with the proposed draft changes to the Act (enclosed).
The consultation is structured with specific questions which can be submitted through Microsoft Form link (https://forms.office.com/r/m5aHxXkubK) on or before September 9, 2024.
The Ministry of Finance (MOF) is consulting on proposed legislative amendments to the Insurance Act to modernize the legislative framework and strengthen consumer protection in today's distribution network in Ontario. These changes include:
1. Creating minimum standards through a dedicated licensing class for life and health managing general agents (L&H MGAs) and entities that perform delegated L&H MGA activities;
2. Providing the Financial Services Regulatory Authority of Ontario (FSRA) with a new rule-making authority to license L&H MGAs and entities that perform the same activities, and
3. Clarifying the duties of insurers, L&H MGAs and agents.
Respondents should review the consultation paper in conjunction with the proposed draft changes to the Act (enclosed).
The consultation is structured with specific questions which can be submitted through Microsoft Form link (https://forms.office.com/r/m5aHxXkubK) on or before September 9, 2024.
Analysis of Regulatory Impact:
The proposed creation of a licensing regime for L&H MGAs will increase compliance requirements on all L&H MGAs and by extension, insurers.
Currently, insurers and MGAs have contractual agreements which may vary from one to another. It is expected that introducing a standard L&H MGA license will streamline compliance requirements and bring about overall savings for insurers, MGAs and advisors/agents.
The key benefits of introducing a licensing regime for L&H MGAs are enhanced consumer protection when working with L&H MGA distribution channels, improved L&H MGA professional standards, improved regulatory certainty for the sector, and greater consumer confidence in the sector.
MOF will consult with L&H MGAs on the proposed licensing framework and will work with FSRA to consult on their rule to minimize regulatory burden on MGAs, such as allowing an appropriate transition period. Accompanying FSRA rules generally take a proportional approach and FSRA sets fees to reasonably reflect their supervisory activities.
Currently, insurers and MGAs have contractual agreements which may vary from one to another. It is expected that introducing a standard L&H MGA license will streamline compliance requirements and bring about overall savings for insurers, MGAs and advisors/agents.
The key benefits of introducing a licensing regime for L&H MGAs are enhanced consumer protection when working with L&H MGA distribution channels, improved L&H MGA professional standards, improved regulatory certainty for the sector, and greater consumer confidence in the sector.
MOF will consult with L&H MGAs on the proposed licensing framework and will work with FSRA to consult on their rule to minimize regulatory burden on MGAs, such as allowing an appropriate transition period. Accompanying FSRA rules generally take a proportional approach and FSRA sets fees to reasonably reflect their supervisory activities.
Further Information:
L&H MGA Consultation Paper
(Download Adobe Reader)
L&H MGA Consultation Draft on the Insurance Act
(Download Adobe Reader)
Proposal Number:
24-MOF015
Posting Date:
July 26, 2024
Comments Due Date:
September 9, 2024
Contact Address:
Financial Institutions Policy Branch
Ministry of Finance, Financial Services Policy Division
95 Grosvenor Street, 4th Floor, Toronto, ON M7A 1Z1
Ministry of Finance, Financial Services Policy Division
95 Grosvenor Street, 4th Floor, Toronto, ON M7A 1Z1