Ontario brokers ask regulator for ownership ‘control-in-fact’ test

The Insurance Brokers Association of Ontario (IBAO) is asking the provincial brokers’ regulator, the Registered Insurance Brokers of Ontario (RIBO), to adopt a ‘control-in-fact’ test to assess the independence of insurance brokers in Ontario.

“Brokers that do not meet the control-in-fact standard should be regulated as agents,” said IBAO president-elect Rod Hancock in a speech to IBAO delegates at the association’s annual general meeting in Toronto on Oct. 19.

Second, Hancock said, “the insurance intermediary market must be regulated by a single independent body, and that RIBO is best suited to that role.”

Giving RIBO full jurisdiction over the province’s insurance intermediary market is important, Hancock added, because “it is in the consumers’ best interest that all insurance intermediaries adhere to the same standard of ethics, continuing education and accountability.”

Hancock made his remarks in the context of IBAO’s ongoing emphasis on broker independence.

“This is the big issue facing brokerages today,” he said. “Recall that in the early 2000s, brokerages had to be owned 51% by brokers. Today, insurance companies can own brokerages or perhaps more accurately can own/control brokerages.”

Under conditions in which “an insurance company, a party to the insurance contract, owns or controls a broker, I would argue we don’t have a broker here but rather an agent,” Hancock said.