Where to look for a made-in-Canada MGA licensing regime

New Brunswick is unique in Canada in that it has established a licensing regime specifically for managing general agents, attendees to an industry event heard recently.

“This is what we’ve been advocating for several years,” Steve Masnyk, outgoing executive director of the Canadian Association of Managing General Agents (CAMGA), said during the association’s conference on June 12. “If I had a magic wand, if we can replicate your regime across…all the provinces, that would be…a lot more appropriate.”

In the past, the MGA world “was almost obscure to regulators,” but in 2023, New Brunswick established its MGA licensing regime, said Robert Picard, compliance officer for insurance with the Financial and Consumer Services Commission of New Brunswick (FCNB).

The first couple of years, the rules that came into play were more educational on FCNB’s part, Picard said during a regulators panel at the CAMGA conference. But now the regulator is finalizing its strategy for audits, which will be based on company size (among other factors). “Being a small regulator, we don’t have endless resources,” Picard said, adding they will likely target one or two MGAs for audit per year.

Like most provinces, Ontario doesn’t have a specific licensing regime for MGAs. However, the Registered Insurance Brokers of Ontario (RIBO) has made many accommodations to allow MGA licensing of MGAs, said Patrick Ballantyne, who recently retired as CEO of RIBO.

“We have tried to create as much of a bespoke MGA licensing regime as we can do under our current act and regulations,” Ballantyne said.

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Auditing considerations

For example, RIBO created a specific audit program geared towards its MGA members. “In the middle of this fiscal year, we completed about 35 different audits on the MGA sector,” Ballantyne said. “I suspect that was triggered by what happened back in December,” he said, referencing TruStar Underwriting, which has been placed into receivership.

“But we have been working as well with the government, trying to convince them of the wisdom of licensing the sector officially,” Ballantyne said. “If that were done, we would have, I suspect, a clearer [picture] in determining what that licensing regime should look like within RIBO, if in fact RIBO had that responsibility.”

The self-regulatory organization is even looking for MGA expertise on its board, Ballantyne added. “We will be [looking] over the next couple of weeks for expressions of interest to serve our board, and I know we will be looking for strong MGA expertise around the table…”

For auditing, RIBO has a digital, modular-based program that factors in things such as premium volume and number of employees, Ballantyne said. It also looks at certain financial requirements, contracts and underwriting authorities. The MGA module was rolled out within about the last year, and looks at unique qualities of an MGA’s risk profile.

One audience member asked what regulatory gap needs to be filled, given that the Office of the Superintendent of Financial Institutions (OSFI) already requires supervision through its B-10 Guidance, Third-Party Risk Management Guideline.

Although there was no consensus on what exactly is needed, Masnyk said “it’s the patchwork of standards and requirements, or lack of, across the country that makes [MGA regulation] difficult.

“And if you are licensed by one regime, then it’s different from another…It’s the patchwork times 10 that makes it the most uncertain and burdensome on MGAs.”

Jason Contant

Jason has been an award-winning journalist with Canadian Underwriter for more than a decade, including the past three years as associate editor and, before that, as digital editor for seven years.