FSRA’s webinar on life insurance agent and MGA licensing suitability (January 17, 2024)

Event Facilitator
00:04    Hello, everyone, and welcome to today's webinar, Life Insurance Agent and MGA Licensing Suitability Guidance Webinar. Before we get started, I'd like to go over a few items so that you know how to participate in today's event. We've taken a screenshot of an example of the attendee interface, and you should see something that looks like this on your own computer desktop in the upper-right corner. You will have the opportunity to submit text questions to today's presenters by typing your questions into the questions pane of your control panel. You may send your questions in at any time. We will collect these and address them during the Q&A session at the end of today's presentation. If we do not have time to address all the questions, we will follow up after today's event. I'd now like to turn it over to our speakers.

Jelena Pejic
00:53    Good morning. Thank you for attending FSRA's webinar on the proposed Guidance for Life Insurance Agents and MGA Licensing Suitability. My name is Jelena Pejic. I'm the Director of Licensing here at FSRA, and I'm joined by my colleague, Tim Miflin, the Senior Manager of Insurance Policy at FSRA. We'll be your host for today. Tim and I will spend some time this morning walking you through the new guidance, which is aimed to help industry and consumers better understand how FSRA determines whether individuals and companies are suitable to hold a life insurance agent license in Ontario. This guidance is currently published on FSRA's website and is open for consultation until February 9th, 2024. I hope you find today's webinar informative.

Jelena Pejic
01:35    Let's get started. Next slide. It's important to acknowledge the land we are on is the traditional territory of many nations, including the Mississaugas of the Credit, the Anishnabeg, the Chippewa, the Haudenosaunee, and the Wendat peoples, and is now home to many diverse First Nations, Inuit, and Metis peoples. We acknowledge that Toronto is covered by Treaty 13 with the Mississaugas of the Credit and the Williams Treaties signed with multiple Mississaugas and Chippewa bands. Next slide. So let's start with the agenda. Tim and I will start by providing you with background on why this guidance is being published and the sections of Ontario law that apply. We'll then move into speaking about the licensing process and how FSRA assesses an applicant or a licensee suitability during the licensing process. We'll start first by speaking about insurance agents, specifically, and then Tim will dive into some of the specific requirements for MGAs. Finally, we'll provide you with your next steps, including how you can provide your comments or feedback with respect to the proposed guidance. We'll take some time at the end to answer questions that you submitted during your presentation. As a reminder, if you do have any questions at any point during the presentation, you can enter them using the Q&A icon on your screen. I'll now hand it over to Tim to start us off with the background.

Tim Miflin
03:04   Thanks very much, Jelena. And good morning, everybody. Thanks very much for joining the webinar today. So as Jelena mentioned, my name's Tim Miflin and I'm the Senior Manager of the Insurance Policy Team at FSRA. And just to build on Jelena's opening remarks, the guidance we're discussing today is proposed guidance. It's not final guidance. We published it for consultation. We're very much kind of seeking your comments, your feedback, your thoughts, and input. So we can consider that as part of finalizing the guidance. As Jelena mentioned, the consultation opens until February the 9th. And so to start by just getting a bit more in the way of background and just kind of talk to kind of the rationale, the drivers for FSRA producing the proposed guidance.

Tim Miflin
03:56    So firstly, we want to confirm standards. We want to be clear. We want to clearly set out the requirements to be suitable to hold a life insurance agent license in Ontario. There are over 60,000 licensed agents currently within the province. And we want to ensure that all of them have the necessary skills, that they're competent, they treat customers fairly, and they comply with the law. So assessing licensing suitability is a kind of key control, key regulatory control for FSRA. But also, we want to be transparent in relation to our role as a gatekeeper. We want applicants and agents to understand how past and current conduct may affect their suitability to hold a life insurance agent license within Ontario.

Tim Miflin
04:50    Can we go to the next slide, please? Okay, let's continue with the background and the rationale for the guidance. I'd just like to spend a moment talking about kind of some of our past supervisory work and activity and some of the kind of findings that have come out of that. So for the last two to three years, FSRA's take a number of supervision reviews, quite focused and targeted reviews. And those have identified a number of gaps and shortfalls in compliance. We've also identified a lack of clarity relating to the roles and responsibilities shared among insurance companies, managing general agents, and independent agents. So we know and recognize that it's always clear who does what. Just focusing a bit on the examples of non-compliance and shortfall clients that have come out and identified as part of that supervision work. We have seen examples of a lack of agent training and supervision.

Tim Miflin
05:55    We've identified examples of unsuitable product sales. So sales made to customers that are not suitable for their individual needs and circumstances. We've also seen examples of agent recruitment and compensation models that may lead to the unfair treatment of customers. And if you're looking for more detail around the findings of our supervision work, our reports have been published and are available on the FSRA website. But in response to those examples of non-compliance, those shortfalls, those concerns around consumer harm. FSRA has developed a six-point plan. And with that plan, we talk about the steps, the actions that we're taking as a regulatory body to address those shortfalls and gaps in that compliance. Those actions include additional supervision work, taking enforcement action where it's deemed appropriate to do so. But from a policy perspective, we also talked to steps, additional steps we're taking to kind of clarify and strengthen the regulatory framework. And this guidance is a good example of that.

Tim Miflin
07:01    Can we go to the next slide, please? Thank you. So this slide just summarizes the legal framework, the relevant legal framework in Ontario. So importantly, licensed agents must meet requirements established under the Insurance Act in Ontario, including requirement an agent be suitable to hold a license. FSRA has broad authority to determine matters that are relevant to assessing whether an agent is suitable to be licensed. FSRA will issue a license to applicants who satisfy the requirements for licensing, but if FSRA believes on reasonable grounds an applicant or agent is not suitable to be licensed, FSRA may refuse, revoke, or suspend a license. I'm now going to pass it across to Jelena who's going to talk a bit more detail around our approach for actually assessing suitability.

Jelena Pejic
08:03    Thank you, Tim. So through our licensing process, FSRA performs an important gatekeeping role to ensure that only suitable applicants can become licensed as agents, and that only suitable agents can remain licensed. The gatekeeping role allows FSRA to assess the risk that a licensed agent will not comply with requirements, commit prohibited acts, or act in ways that lead to unfair outcomes for consumers. With over 60,000 agents in Ontario, strong gatekeeping is necessary to ensure agents are suitable and qualified, which reduces the risk of non-compliance and potential consumer harm. The guiding principles are consumer protection and risk-based licensing. Lower risk applications can be approved in full based on a less intensive review. However, moderate or high-risk applications may be approved with conditions or they may be refused a license if the applicant is bound to not be suitable or if requirements are not met.

Jelena Pejic
09:02    Next slide, please. So let's talk a little bit about the licensing process. Here on the screen we have six steps, and I'll just go over these steps. So the licensing process begins with an application for a license. This can be an application for a new license, an application to reinstate an existing license, or an application to renew the license. Through the application process, the onus is on the applicant to fully read, complete, and review the application before it's submitted to FSRA. The application itself consists of multiple steps. For a new insurance agent, the sponsoring insurer will be included in the process. The sponsoring insurer will initiate the application and they will need to certify that they've taken steps to screen the applicant and are satisfied that the applicant is suitable to carry on business as an agent. Next, the applicant will complete the remainder of the application. And this remaining part will apply whether it's for a new applicant, a reinstatement, or a renewal. The beginning of the process will start with the applicant reviewing some of their own information, such as their contact information, and providing proof that they satisfy any of the licensing requirements. So that can include education requirements or errors and emissions insurance requirements, for example. The applicants will also be asked a series of questions, which we commonly refer to as suitability questions, which are used to assess their suitability to be licensed. For example, the applicant will be asked about their criminal record, any bankruptcies or insolvencies, enforcement actions by other regulators, and any lawsuits or claims against them. For a business license, they'll be asked similar questions in the context of the business and its directors and officers. And additional questions can also be expected with respect to the business model, the type of activity the business will engage in, and the business relationships that exist.

Jelena Pejic
10:57    I want to stress that when an applicant discloses information that may affect their suitability, the guidance does outline that the information should fully and accurately detail the surrounding circumstances, including when the conduct occurred, what led to the conduct, and any corrective steps that have been undertaken. Once the applicant has completed the application process, they'll be prompted to review that information prior to submitting to FSRA. They'll also be asked to attest that the information they've provided in the application is complete and accurate. And they also will be asked to acknowledge that any false or misleading responses could result in the application being refused. Once FSRA receives that application, our team will review the applications along with any history related to the applicant. FSRA may require additional information or documents from the applicant to assist with this review process. Following the review, FSRA may determine that the license can be issued or it may determine that a suitability issue exists and therefore it will take actions to add conditions to the license, refuse the license, and possibly impose monetary penalties. I want to stress the last item there, number six. It's important to note that the suitability assessment is not only tied to the license application. A suitability assessment can take place at any time during the licensing term. If FSRA does become aware of any new information, any potential misconduct, or any misleading or false statements on previous applications, FSRA may take actions to reassess the suitability of the licensee, which may lead to action against their license.

Jelena Pejic
12:41    Next slide, please. So you may be wondering what circumstances may lead to a suitability concern. So the questions on the licensing application that I spoke about earlier, as we refer to them as suitability questions, are intended to facilitate FSRA's ability to perform the gatekeeping role. The onus is on the applicant to ensure they review each question and respond accurately and in full. In the guidance and on this slide here, we've provided some examples of circumstances that will be asked about on the application and may lead to suitability concerns. These include somebody with a criminal record, including past convictions or pending charges, any breaches of law, regulations, or FSRA rules, which includes any actions taken by another regulator here in Ontario, outside of Ontario, or outside of Canada. It can also include any insolvency or including bankruptcy and consumer proposals, whether they've been discharged, fully performed, or they're still ongoing. The last item I'll highlight here is the non-disclosure on an application or dishonesty to FSRA or others. This includes failing to provide information on an application, making reference to a past disclosure that never occurred, or providing false or fraudulent information to the regulator. A key factor in our gatekeeping role is identifying a risk that an agent may not conduct themselves with honesty and integrity. A nondisclosure or lack of honesty when interacting with the regulator is a key indicator that will cause concern and may lead to the refusal of an application. So it's absolutely necessary that the agents review those applications in full and ensure that they are providing complete and accurate information.

Jelena Pejic
14:24    Next slide, please. So we've talked about the different factors. You may now be wondering, does that mean that every application where a disclosure is made will be refused? That's not the case. It's important to note that making a disclosure on an application does not immediately mean that the individual will not be suitable to be licensed. Upon a disclosure on the application, FSRA will assess a number of factors which are outlined in the guidance, and we've highlighted some of them here. These include the nature of the conduct, the time since the conduct occurred, and whether there's a pattern of misconduct or poor behavior. FSRA will also assess any redeeming behavior or steps taken by the agent to rectify the issue. I'd once again like to take this opportunity to highlight that a full and accurate disclosure is a key component of this assessment. Nondisclosure in and of itself may negatively impact suitability and may result in a license refusal, revocation, or other sanction, including a monetary penalty. Even if the undisclosed information itself does not justify such a sanction, the concern is that providing an omission or making a material misstatement on an application does cause concern about the agent's honesty and integrity. I'll now pass it back over to Tim to talk to us a little bit more about suitability requirements specific to MGAs.

Tim Miflin
15:47    Thanks, Jelena. So the proposed guidance includes a dedicated section which is relevant for life and health managing general agents, MGAs. So the term MGAs refers to a corporate partnership life insurance agency that performs specific types of actions on behalf of insurance companies. This can include recruiting, screening, training, supervision, or supervising of life agents. And the proposed guidance includes more detailed definition. MGAs, as license agents, are subject to the requirement to be suitable to hold a license. So the standards we're talking about today are absolutely relevant to life and health MGAs. If you could please go to the next slide.

Tim Miflin
16:39    So this slide starts to summarize essentially some of the standards, all the points and considerations to be taken into account when determining suitability to hold a license in Ontario. For the MGA to be considered suitable, it must demonstrate: has the expertise, the resources to operate in a trustworthy and competent manner. They want to be confident and knows and understands its regulatory obligations and takes reasonable steps to ensure that the MGA and any agents which they recruit, train, supervisor support, either directly or indirectly through sub-agents are suitable for licensing. When assessing suitability, we'll also consider the adequacy of the MGA's control and compliance functions. The steps is taken to help ensure that it can meet its regulatory obligations. It can comply with the law. We'll also look for any evidence of practices that contravene regulatory requirements and standards.

Tim Miflin
17:40    Next slide, please. The guidance also serves to inform insurers on what FSRA considers to be a reasonable system for the oversight of agents compliance. So to confirm, insurance companies have an obligation to have a system in place that's reasonably designed to monitor the suitability and compliance of agents who act on their behalf. And these responsibilities include reporting to FSRA if the insurer has reasonable grounds to believe that an agent who acts on its behalf is not suitable for licensing. And importantly, oversight functions of an insurer have been delegated by that insurer to an MGA. The insurer retains accountability and responsibility. And as further detail on the responsibilities of the insurance company are contained within the guidance.

Tim Miflin
18:44    Go to the next slide, please. Fantastic. So I just want to conclude my own remarks by just confirming next steps in relation to the public consultation on the guidance. As we mentioned at the beginning of the webinar, the guidance right now is proposed guidance. It's not final. It's open for consultation, and that consultation runs until February the 9th. Please, if you get the chance or opportunity, do submit your comments via the FSRA website. They're all considered by myself and the team. And when we go on to publish the guidance in its final form, we will include a summary of the consultation feedbacks that we do receive. I know we're very much focused on the proposed guidance this morning, but also just to highlight that FSRA plans actually consult publicly on proposed rule for life and health MGAs. Thinking back to some of those compliance shortfalls and gaps we've identified in the insurance marketplace, we are looking to introduce new requirements by way of a rule which would apply to life and health MGAs to essentially strengthen the regulatory framework. Now go to the next slide, please. I'll hand it over to Jelena.

Jelena Pejic
20:06    Thanks, Tim. So this concludes the formal presentation. Thank you for attending today's session. We'll now take some time to respond to the questions we've received through the chat. If you do still have questions that you haven't had a chance to submit, you can still enter them using that Q&A icon on your screen. We do have a large number of participants on the call today, which is great to see, and we've already received a number of questions. So we'll do our best to respond, but for those we are not able to answer today, as we mentioned earlier, we will be issuing an email to those in attendance with the questions along with the responses and the recording of this webinar today. That will be coming in the coming weeks. In some instances where the questions are similar, we will be responding to them only once. So I'll hand it over to our colleague, Steven, who's here on the call with us, who's going to help us with some of those questions. Go ahead, Steven.

Steven
20:55    Thanks, Jelena. So the first question is for yourself, Jelena. Can you please provide some examples of what would be considered misconduct that would impact life agent and applicant suitability? And there are a lot of questions about insolvency as well, so if you can specifically touch on that.

Jelena Pejic
21:14    Perfect. Thanks so much for the question, and thank you, Steven. So when we talk about misconduct through the licensing process, there's really a number of ways that that information can come to FSRA. The first and one of the more crucial ways that it comes to FSRA is through the licensing process. So when a license application is submitted, the agent will be prompted to answer that series of questions with respect to their suitability, and those will include questions about criminal records, insolvencies including bankruptcies, any lawsuits, and enforcement actions by another regulator. So it's really key that any agent, any applicant submitting the application reviews those questions and does answer them in full, along with providing those details that we talked about and that are outlined in the guidance. When we talk about bankruptcy, specifically, FSRA is looking to understand any past insolvencies, any past bankruptcies. That includes ones where they've been fully discharged or consumer proposals that have been fully performed. And we're also interested in understanding any ongoing matters. So where somebody has filed for bankruptcy and is going through the motions of that process. I do want to stress that simply disclosing this type of information on the application does not mean that the application will be refused. What it means is that FSRA will be able to adequately assess your suitability to be licensed and assess any risks tied to that suitability and resolve those appropriately.

Steven
22:40    Okay. Thank you. So we have another one for Jelena. So this guidance talks about the suitability of an individual to be licensed. What would FSRA do to those individuals that they may consider to be unsuitable?

Jelena Pejic
22:58    Thanks again. That's a really good question. So with respect to the licensing process and the process that FSRA follows, when we receive a license application, the first thing that will happen is that our licensing team here at FSRA will review the application, assess the information provided by the applicant, and determine whether there's a need for additional information or documents, which we may collect from the applicant or from other sources. On the conclusion of our review, if we make a determination that the applicant is not suitable to be licensed, that would mean that we would be heading towards refusing their application. There's a number of different avenues that can take place. The applicant may be offered an opportunity to withdraw their application prior to FSRA taking any formal steps against the application. Or in other cases, FSRA may go straight to refusing the application. What that process looks like is FSRA first issuing a notice of proposal to refuse the application. That is something that will be delivered directly to the applicant, at which point the applicant will have the opportunity to request a hearing to effectively appeal that decision. And so then there is due process that occurs afterwards where the applicant does have the right to a hearing if they wish to make any arguments with respect to that decision.

Steven
24:16    Okay. Thank you. And a follow-up for you as well, Jelena. Can there be any repercussions for an insurer that sponsors applicants that may be unsuitable?

Jelena Pejic
24:30    So thanks again for that question. And I think both Tim and I touched on that in our presentation today. What I would say is it's very crucial for FSRA to see that insurers have processes in place to appropriately screen and monitor agents. In a situation where an insurer may be sponsoring an agent that is found to be unsuitable, FSRA will be keeping the insurer in the loop about that process. So the insurer is generally copied on any emails, interactions with the licensee so they're aware of the interactions with FSRA. What FSRA will be looking for is a dialogue with that insurer to understand what steps they've taken to screen and certify that that agent is suitable. And then depending on each process, we will elaborate on those discussions as needed.

Steven
25:20    Okay. Thank you. So a couple of questions for Tim. First off, can the consultation period be extended beyond February 9th?

Tim Miflin
25:32    Thanks, Steven. Our preference is to gain as many of the kind of comments and feedback as possible within the consultation window. But we recognize it's busy times, and we're not necessarily the only regulatory body publishing materials for consultation and feedback. So yes, if individuals, companies need a little more or just a little more time to prepare their comments and submit them to us, I am open to that. But I would ask, please, that you submit an email to myself or via the web address on the website so we can consider that and get back to you.

Steven
26:21    Okay, thank you. A follow-up for you, Tim, as well. So this is the first time that managing general agents or MGAs are identified in guidance or law in Ontario. Why now? Is there a specific reason, and sort of why in a guidance format versus the Insurance Act?

Tim Miflin
26:49    Okay. Thanks, Steven. So we classify this guidance as interpretation guidance. So it's guidance that interprets and explains in more detail requirements that exist, where it helps ensure that we're transparent around how MGAs and other individuals and entities that need to be licensed, the standards they need to meet to be licensed. So very much interpreting requirements at an insurance level in particular. But as I mentioned in the presentation, we're looking to further expand and strengthen the regulatory framework as it relates to MGAs. And we're going to see that in a form of a rule, and that's what we'll consult on further down the road.

Steven
27:31    Okay. Thank you. And a follow-up for you again, Tim. How many MGAs or advisors would be on the committee at FSRA?

Tim Miflin
27:46    Thank you. I think this is referring to the technical advisory committees that we have at FSRA. So just by way of background, FSRA has a dedicated technical advisory committee or TAC that focuses on insurer oversight of managing general agents. And this committee is made up of representatives from the sector, from industry, and it very much acts kind of sound aboard. It's there to provide us as a regulator with input, thoughts, feedback on the supervision work and the policy work that we undertake as a regulatory body. So the committee membership is made up of representatives from insurance companies and from agents as well. And we're very transparent. Excuse me, we're transparent about the membership. In fact, if you go onto the FSRA website, there's a dedicated link for FSRA committees. And if you look at the Insurance Oversight MGA Committee, you can see who the current members are there. You can identify who the reps are from the MGA site.

Steven
28:54    Okay, thank you. So we have two more questions. So one more for you, Tim. Does FSRA have a standard definition of MGA or managing general agents?

Tim Miflin
29:09    The short answer is yes. And in fact, looking at the guidance in front of me now, the definition, which I part read during the presentation, is on page four of the proposed guidance. So just to read from that now, the term MGA refers to a corporate partnership, life insurance agency that deals with the public and engages in what is required by contract to perform. And it goes on to list the activities on behalf of what's in support of an insurance company. So I'd encourage everybody when they're considering the guidance to look at the activities that we've captured within the definition of an MGA. Are those the right ones? Any additional ones we should be considering? Or should we make any amendments to the activities that are considered and listed as part of the proposed definition right now? So short answer is yes, and it's on page four of the guidance.

Steven
30:10    Perfect. Thank you. Okay, so we'll have one last question. This one is for you, Jelena. Does the guidance differentiate between agents that are sponsored versus non-sponsored agents?

Jelena Pejic
30:25    Thanks for that question. So the answer to that question in short is no. So the process that we use to assess the suitability of an agent will be the same whether the agent is sponsored or not sponsored. However, our approach will differ in the sense that with the sponsoring insurer being present in the equation for a sponsored agent, we will be including that sponsoring insurer through the process and requesting that they also are aware of any concerns that come up through the process and are once again certifying that they believe that that agent is suitable to be licensed. But with respect to any of the circumstances that we talked about, we talked about criminal record, we talked about bankruptcy, lawsuits, and actions by other regulators, all of those matters will be assessed based on the factors that we also spoke about, which is the length of time since the conduct occurred, the actual conduct, and how material it is to their activity as an agent. As well as any pattern of misconduct that's been observed.

Jelena Pejic
31:27    Okay. So if I heard you correctly, Steven, that was our last question. So I'll wrap things up for us today. We do want to thank you so much for taking the time to be with us today. We do encourage you once again to please take this time to submit your feedback with respect to the guidance. It is currently a proposed guidance, and we are seeking feedback from the public, including any agents and industry members. The consultation period will close on February 9th. I'd also like to remind you that today's webinar was recorded, and the recording will be available on FSRA's website in the following weeks. I did see some questions there about receiving a copy of the deck. So we will be posting, actually, the full video of the recording, which will include our comments along with the deck. We hope that you found this session helpful. And as always, you can reach out to FSRA if you have any other questions. Thank you and have a great rest of your day.

Slide 1
[LOGOS: FSRA. Financial Services Regulatory Authority of Ontario and the Coat of Arms of Ontario.]

[White text appears over a blue background.]

[TEXT ON SCREEN: Proposed Guidance: Life Insurance Agent and MGA Licensing.]

[TEXT ON SCREEN: Webinar. Date: January 17, 2024 at 11:00am to 11:45am. Speakers: Jelena Pejic. Director – Licensing, Market Conduct, FSRA and Tim Mifflin, Senior Manager – Insurance Policy, FSRA.]

[Jelena and Tim appear in small video windows next to the presentation slides.]

Slide 2
[Slide appears on screen. LOGOS: FSRA. Financial Services Regulatory Authority of Ontario and the Coat of Arms of Ontario.]

[TEXT ON SCREEN:
Go To Webinar Tutorial. Participating in today’s Webcast Attendee Control Panel. The attendee interface has a series of icons including a text box for user to type a question.]

Slide 3
[Slide 1 reappears]

Slide 4
[The Land Acknowledgment appears on screen.]

Slide 5
[The agenda appears on screen. 1. Background. 2. Suitability requirements under the Insurance Act and FSRA Act. 3. What is FSRA’s Licensing Process? 4. How FSRA Assesses Suitability For Licensing. 5. Public Consultation/Next Steps. 6. Q&A.]

Slide 6
[The background slide is titled: Why is FSRA publishing Guidance for Licensing Suitability? It contains an image of three business people. It has three points. 1. Confirm Standards: FSRA has proposed Guidance that clearly sets out the requirements to be suitable to hold a life insurance agent license in Ontario. 2. Better protect consumers: FSRA wants to ensure all life agents in Ontario, including Managing General Agents (MGAs), have the necessary skills, treat customers fairly, and comply with the law. 3. Communicate FSRA’s gatekeeping role: For applicants and agents understand how past and current conduct may affect their suitability to hold a life insurance agent license in Ontario.]

Slide 7
[The next ‘Background’ slide is titled: Supervision Findings. It contains a magnifying glass icon with a line with an arrow on each end in the middle of the lens. The icon is located in a gap between two rock features. It has three points. 1. FSRA’s supervisory reviews have identified gaps in compliance in the insurance marketplace and a lack of clarity relating to the roles and responsibilities shared among insurance companies, MGAs, and independent agents. 2. These gaps include: A lack of agent training and supervision, unsuitable product sales, and agent recruitment and compensation models that may lead to the unfair treatment of customers. 3. FSRA is releasing this proposed Guidance as part of its six-point action plan to correct troubling business practices identified in the life insurance sector.]

Slide 8
[The next slide is titled: Suitability requirements under the Insurance Act and FSRA Act. An image shows a checklist icon with a gavel and an award ribbon. The slide has three categories. 1. FSRA has broad authority to determine matters that are relevant to whether an agent, including an MGA, is suitable to be licensed under section 392.4 (1) of the Insurance Act. 2. Ontario Regulation 347/04 under the Insurance Act sets out qualifications for licensing and circumstances that FSRA considers when assessing suitability. 3. FSRA’s assessment of suitability is also guided by its statutory mandate under the FSRA Act.]

Slide 9
[A new slide appears. It’s titled: What is FSRA’s Licensing Process? The slide contains a shield icon with a checkmark above images of three faceless people. The slide has two categories. The first is FSRA’s guiding principles. Consumer-centric: FSRA’s approach to regulating individuals and entities focuses on the impact on consumers. Risk-based: FSRA directs its resources to the regulated individuals and entities that pose the highest risk of harm. The second category is FSRA’s Gatekeeping Role. FSRA ensures market participants are suitable and qualified, which reduces the risk of non-compliance or consumer harm. A strong gatekeeping role is a cornerstone of FSRA’s licensing activities.]

Slide 10
[The next slide is titled: What is FSRA’s Licensing Process? The slide contains an image of a clipboard with a checkmark. The slide reads: FSRA’s process for assessing suitability. 1. Sponsoring insurer screening and certification. 2. Application and eligibility assessment. 3. Suitability assessment. 4. Disclosure and attestation. 5. Actions resulting from suitability assessments. 6. Suitability assessment during licensing term.]

Slide 11
[The next side is titled: How FSRA Assesses Suitability For Licensing. It contains an image of two business people sitting down on chairs. The slide reads: Circumstances that may lead to licensing suitability concerns. Conduct or activities that create a risk that an agent, including MGA, may fail to comply with the law or to treat customers fairly, or act contrary to legal and regulatory obligations, may demonstrate that an applicant or agent, including an MGA, is not suitable for licensing. Includes the following (but not limited to): Criminal charges. Breaches of law, regulations or FSRA rules. Insolvency. Non-disclosure on an application. Dishonesty to FSRA or others. Failing to diligently perform any duty or activity that an agent, including an MGA, undertakes or agrees to perform on behalf of an insurer, etc.]

Slide 12
[The next slide is titled: How FSRA Assesses Suitability for Licensing. It contains a magnifying glass icon with a business person under the lens. The slide reads: Key factors FSRA considers in assessing the licensing suitability of an applicant or agent, including an MGA. When FSRA becomes aware of conduct and circumstances that are relevant to suitability, FSRA evaluates the impact of the conduct on suitability, according to the interpretation outlined in the Guidance. Includes the following (but not limited to): Nature of the conduct. Patterns of behaviour. Time since conduct occurred. External factors that would explain the misconduct is unlikely to reoccur. Whether past conduct resulted in a regulatory or criminal processing or sanction, etc.]

Slide 13
[A new slide appears. It’s titled: How FSRA Assesses Suitability for Licensing. An image depicts two people in conversation. The slide reads: Suitability considerations apply to MGAs. Three points are outlined. 1. In this Guidance, the term MGA refers to a corporate or partnership life insurance agency that performs specific types of actions on behalf of insurance companies including recruiting, screening, training, and supervising life agents. 2. MGAs, as licensed agents, are subject to the requirement to be suitable to hold a license. 3. The individual agent suitability considerations described in the guidance, including those outlined in the corporate and partnership agents’ section, apply to MGAs.]

Slide 14
[The next slide is titled: How FSRA Assesses Suitability for Licensing. It reads: For an applicant or agent whose business is that of an MGA to be considered suitable, the agent must demonstrate it: has the expertise and resources, to conduct activates in a trustworthy and competent manner. Knows and understands its regulatory obligations and takes reasonable steps to ensure that the MGA and any agents which they recruit, train, supervise or support, either directly or indirectly through sub-agents, (individual agents) are suitable for licensing. FSRA also considers: adequacy of the MGA’s control and compliance functions to ensure it meets its regulatory obligations as well as any obligations that they undertake on behalf of insurers. Improper Practices: practices that contravene regulatory requirements and standards.]

Slide 15
[The next slide is titled: How FSRA Assesses Suitability for Licensing. It contains an image of a magnifying glass scanning a document. The lens has a checkmark under it. The image also has crosshairs with a person inside it. The slide reads: Responsibility for Life Agent Activities. There are three points. 1. Insurance companies have an obligation to have a system in place that is reasonably designated to monitor the suitability and compliance of agents who act on their behalf. 2. This includes reporting to FSRA if the insurer has reasonable ground to believe that an agent who acts on its behalf is not suitable for licensing. 3. Where oversight functions of an insurer (e.g. agent training, supervision and monitoring) have been delegated by an insurer to an MGA, an insurer retains responsibility.]

Slide 16
[The next slide is titled: Public Consultation/Next Steps. The slide reads: Update Guidance. You have an opportunity to comment on the guidance. FSRA will be accepting submissions on our website until Friday, February 9, 2024. FSRA will consider feedback and publish an update on the Guidance in due course. Rule: Planned Public Consultation. FSRA plans for a consultation on a proposed Rule of Life Health MGAs as set out in our statement of priorities in our annual business plan.]

Slide 17
[The next slide reads: Questions? It has an image of two people in conversation.]

[Jelena and Tim smile]