What regulators may have in store for MGAs

Risks related to Managing General Agencies (MGAs) are likely to “continue to be an area of focus and regulatory development,” in the wake of events like the TruStar receivership, Koker Christensen, partner and co-leader of Fasken LLP’s financial services group told the Insurance Bureau of Canada’s April InSight Summit 2025.

He noted the Office of the Superintendent of Financial Institutions (OSFI) is looking at MGAs through the lens of third-party risk.

“There’s an increasing recognition how important MGAs are in certain…lines of business, and therefore…the significance of the risks that relationship can present to insurers,” he told summit attendees.

Provincial regulators also are focusing on MGAs, he added, although they’re more focused on consumer issues.

Related: How TruStar’s receivership has impacted the industry

At a separate regulatory session during the Apr. 3 summit, Stuart Carruthers, a partner at Stikeman Elliott LLP, noted the Financial Services Regulatory Authority (FSRA) did a thematic review of the MGA distributional landscape in Ontario and released a report in Dec. 2024.

While that report didn’t yield any surprises, he said it did show some companies are quite dependent on MGAs.

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“[FSRA is] concerned that certain MGAs may not need to be licensed, as they’re not in Ontario under the [Registered Insurance Brokers of Ontario] regime if they’re not dealing directly with the public,” he told attendees. “And [they’re] concerned about…how do insurers then ensure that their distribution channels, like MGAs, are complying with fair treatment of customers expectations, are complying with the [Unfair Deceptive Acts or Practices] Rule…and is there enough insurer oversight of MGAs?”

What may come next…

In a related development, Carruthers said FSRA “has a whole regime that’s in the process of being launched to separately license and regulate life and health MGAs…and we’ll see whether that…migrates over or bleeds over…to the P&C side.”

Further, OSFI has been engaging with carriers and “doing its own thematic review on MGA distribution as part of third-party risk,” he said. That’s part of a larger trend of Canadian regulators doing thematic revues, adding FSRA did a home insurance thematic review last year, “and OSFI has said that it’s working on an auto insurance thematic review,” he added.

“So we will see more of that.”

Phil Porado

Phil, an award-winning journalist with over 30 years of experience in financial topics, has been managing editor of Canadian Underwriter for more than three years.