Ontario's MGA rule proposal draws calls for clearer scope

FSRA's updated proposal broadens the definition of managing general agents (MGAs), and industry groups including Advocis and CALU say it could bring many small advisors and corporate agencies under new compliance and fee obligations.

Ontario's regulator has revised a proposed rule for managing general agents (MGAs) in the life and health insurance sector, and industry groups have raised concerns about the changes. Advocis and the Conference for Advanced Life Underwriting (CALU) filed submissions saying the October revision applies the MGA label more broadly than before. FSRA says changes are needed after reviews found some distribution practices harmed consumers. Stakeholders warn the broader wording could affect small corporate agencies and individual advisors in unexpected ways. What is known: - Advocis and CALU submitted that the revised rule has an "overbroad scope" and could classify many licensed advisors and small corporate agencies as MGAs. - FSRA says the proposal aims to strengthen oversight because reviews, including a 2023 report, found instances of unsuitable sales in the distribution channel. - Industry consultants estimate the change could reclassify up to several thousand corporate agencies under a tiered MGA system. - Concerns include new fees and duplicate compliance obligations for advisors whose compliance is already overseen by affiliated MGAs. - The proposed rule is expected to be finalized this year and implemented by summer. Summary: The revision is intended to improve oversight and reduce unsuitable sales, but stakeholders warn its broader wording could impose added compliance costs and administrative burdens on small, often family-run advisory practices. FSRA plans to finalize the rule this year with implementation by summer, and stakeholders have asked for clearer definitions and suitability criteria before that timeline.