Meeting Summary - February 19, 2021

L&H Insurance Technical Advisory Committee (TAC) on Insurer Oversight of MGAs

Meeting summary

Date: February 19, 2021
Time: 1:30 – 3:00 PM ET

1. Opening remarks

FSRA staff welcomed attendees to the second meeting of the TAC and introduced the meeting’s focus: FSRA’s distribution channel review and getting feedback from the TAC on the preliminary amalgamated observations. This will also be the purpose of the March 5th meeting.

2. FSRA distribution channel review: purpose and approach

FSRA’s review of distribution channels was an information-gathering exercise on the different types of insurance distribution models employed by the reviewed insurers.

The review found independent agents through managing general agencies (MGAs) to be the predominant distribution channel in Ontario among the reviewed insurers. As such, FSRA is working on achieving a deeper understanding of how the reviewed insurers are overseeing their relationships with MGAs, including supervision of delegated functions and the contracted agents of those MGAs.

3. Sharing preliminary results

To collect data, FSRA conducted a formal review that was followed by interviews, walkthroughs, and document requests. The four modules reviewed were:

1. Understanding distribution channels
2. Screening and onboarding of MGAs
3. Insurer-MGA agreements and contracts
4. Supervision and monitoring of delegated functions

This meeting focused on the first two modules.

Module 1 – Understanding the distribution channel: scope and observations

FSRA staff discussed Module 1 regarding distribution models used by the reviewed insurers and the proportion of business placed through those models. FSRA also reviewed the numbers of MGAs and independent agents with whom insurers are typically contracted, as well as the overall product delivery strategy.

TAC members commented with a range of perspectives on MGA distribution, such as number of contracted MGAs and disclosure practices, that were noted for future consideration.

Module 2 – Screening and onboarding of MGAs

FSRA staff discussed the elements the reviewed insurers take into consideration before entering into agreements with MGAs. FSRA also reviewed the overall strategy for selecting MGAs, the process for screening and onboarding MGAs, delegated functions to MGAs, and due diligence considerations.

All reviewed insurers had agreements in place with contracted MGAs and delegated some agent-related functions to MGAs.

FSRA staff further explained some of the noted agent screening practices among reviewed insurers.

The next two modules (3 and 4) will provide more in-depth observations on screening, training, monitoring and oversight activities in relation to contract design and operational effectiveness.

4. Discussion and questions

TAC members asked clarification questions and discussed the following topics:

• Number of MGAs contracted
• Definition of MGA
• Definition of subcontractor
• Reliance placed on MGAs for agent screening
• Use of APEXA as a compliance tool

5. Review timelines and proposed TAC meetings

FSRA staff reviewed the timelines highlighting the next step for the TAC: validation session on March 5 from 1:30 to 3pm. Following that, FSRA will be sharing information with its Stakeholder Advisory Committee and Consumer Advisory Panel before publishing consolidated observations.

FSRA staff thanked members for their perspectives and feedback on the observations presented, and noted recent FSRA communications regarding agent oversight for consumer protection (FSRA Requires Insurers to Monitor Agent Conduct, February 17/21).

Attendance record

Invited/Attended	Company Name	Attendance Status (A)ttended; (R)egrets; (S)ubstitute
Earleen Moulton	BFG Financial/CAILBA	A
Mari-Jayne Woodyatt	BFG Financial	A
David Sutton	The Edge Benefits	A
Mary Ingarao	SunLife	A
Kim Hayes	Manulife	A
David Stewart	Financial Horizons Group	A
Brent Mizzen	CLHIA	A
Todd Hynes	Ivari	A
Sean Sorensen	Walker Sorensen LLP	A
Paul Holba	Empire Life	A
Andrew Fitzpatrick	Canada Life	A
Leanne Winter	Equitable Life	A
Sheldon Stier	Stier Financial Advisors	A
Terri Botosan	Hub Financial Inc.	A
Huston Loke	FSRA	R
Erica Hiemstra	FSRA and TAC Chair	A
Swati Agrawal	FSRA	A
Rosemary Steffler	FSRA	A
Kevin Lim	FSRA	A
Thera Medcof	FSRA	A
Joel Gorlick	FSRA	A
Chris Caldarelli	FSRA	A
Laura McLellan	FSRA	A
Shawkat Ferdousi for Beth Elder	MoF	S
Hannah Rose	FSRA	A
Nathan Aranha	FSRA	A
Sohail Deen	FSRA	A