L&H Insurance Technical Advisory Committee (TAC)
on Insurer Oversight of MGAs
Meeting summary
Date: February 28, 2022
Time: 9:00 – 10:30 AM ET
1. Opening remarks
FSRA staff spoke to the organization’s overall objective to develop regulatory frameworks that advance the best possible outcomes for life and health (L&H) insurance customers.
FSRA welcomed new members to the TAC since the group last met on March 5, 2021.
- Nina Kavalinas, representing CAILBA and replacing Earleen Moulton
- Matthew Onyeaju from Sun Life, replacing Mary Ingarao
- Erin McKee, representing Investment Industry Association of Canada
FSRA staff noted the key objective of the meeting to seek TAC input on potential MGA-specific requirements to be contemplated under a future framework. A key aim of establishing an MGA regulatory framework is to ensure customers are treated fairly throughout the entire distribution chain, end to end.
2. FSRA distribution channel review - Recap
FSRA staff provided a refresh on the high-level insights gleaned from two main review streams in 2021. These insights were published in two reports.
Both reports illustrate how FSRA is taking steps to operationalize the principles contained within FTC guidance and strengthen the distribution chain, starting with the predominant distribution channel. Among a list of observations, the reports identified that a significant degree of conduct-related activity (i.e. agent screening, training, monitoring) is being delegated by insurers to the MGA channel and that contracts can lack a clear delineation of roles and responsibilities between, and expectations of, insurers and MGAs.
3. Future regulatory framework
i. FSRA policy update
FSRA provided an overview of the policy work completed to date, starting with research and analysis of frameworks in place across other jurisdictions. FSRA Policy has also considered targeted customer outcomes for the framework and what would be needed to support them. At this time, FSRA is not looking to get into the “how,” or potential implementation tools for the framework, but rather what the framework should be intended to achieve.
FSRA’s 2022-23 Statement of Priorities includes a key deliverable to consult publicly on an approach for an MGA regulatory framework. FSRA will likely reach this deliverable towards the end of the next fiscal year, i.e. the early part of 2023.
ii. Targeted goals & outcomes
FSRA staff spoke to the core goals to support FTC in the individual insurance products space. The goals focus on a regulatory framework that ensures compliance functions contractually delegated by insurers to MGAs are regularly and proactively carried out, and verified. At the same time, FSRA is mindful of the potential for duplication of efforts between insurers and MGAs.
Members agreed the stated goals are reasonable. Members also agreed that the “how” is what matters, and the approach needs to work for everyone.
MGAs
Regarding MGAs, FSRA and TAC members discussed factors for suitable and knowledgeable senior managers, reasonable agent compliance programs, and a designated Agent Responsible for compliance program oversight.
Insurers
FSRA spoke to insurers’ core outcomes, including that insurers have ultimate responsibility for distribution channels, agent screening, training, monitoring and reporting, and have appropriate policies and procedures for selecting and overseeing distribution channels.
Where insurers delegate screening, training or monitoring duties to an MGA, the insurer remains responsible for ensuring the duties are completed as expected.
Members noted that insurers would appreciate having a clear definition of MGAs and which entities are captured, rather than leaving it up to the intermediary.
Individual Agents
FSRA spoke to desired outcomes regarding individual agent suitability. Right now, FSRA recognizes product knowledge as a core outcome but will be looking at suitability more broadly.
4. Next steps
FSRA staff asked TAC members to review questions posed in the meeting and noted that FSRA will likely re-engage with the TAC in late summer 2022. FSRA plans to reach out to other stakeholders, including FSRA’s Consumer Advisory Panel. By the end of March of next year (2023), the aim is to publish a proposed framework for consultation.
Attendance record
| Invited/Attended |
Company Name |
Attendance Status |
|---|---|---|
|
Nina Kavalinas |
Financial Horizons Group |
A |
|
Matthew Onyeaju |
Sun Life |
A |
|
Erin McKee |
Echelon Partners |
A |
|
Mari-Jayne Woodyatt |
BFG Financial |
A |
|
David Sutton |
The Edge Benefits |
A |
|
Kim Hayes |
Manulife |
A |
|
David Stewart |
Financial Horizons Group |
A |
|
Brent Mizzen |
CLHIA |
A |
|
Sean Sorensen |
Walker Sorensen LLP |
A |
|
Paul Holba |
Empire Life |
A |
|
Andrew Fitzpatrick |
Canada Life |
A |
|
Colin Simpson |
Equitable Life |
S (on behalf of Leanne Winter) |
|
Sheldon Stier |
Stier Financial Advisors |
A |
|
Terri Botosan |
Hub Financial Inc. |
A |
|
Huston Loke |
FSRA |
A |
|
Erica Hiemstra |
FSRA and TAC Chair |
A |
|
Swati Agrawal |
FSRA |
A |
|
Rosemary Steffler |
FSRA |
A |
|
Kevin Lim |
FSRA |
A |
|
Tim Miflin |
FSRA |
A |
|
Joel Gorlick |
FSRA |
A |
|
Chris Caldarelli |
FSRA |
A |
|
Laura McLellan |
FSRA |
A |
|
Kirubel Abebe |
FSRA |
A |
|
Nathan Fahey |
MoF |
A |
|
Isaac George |
MoF |
A |
|
Lucy Kang |
MoF |
A |
|
Nathan Aranha |
FSRA |
A |
|
Sohail Deen |
FSRA |
R |
|
Olivia Lee |
FSRA |
A |