At the The Insurance and Investment Convention held in Montreal in November, James McMahon, president of Financial Horizons Group, Quebec region, revealed that insurers have begun to force MGAs to look after the inspection of their insurance advisors. This has never before been the case, he says.
“That’s how it works for mutual funds. In insurance, it is insurers’ responsibility. So, they are downloading their inspection mandate onto the backs of their intermediaries. We are obliged to go out and inspect firms,” he said.
Pierre Vincent, Senior Vice-President, Individual Insurance and Sales at iA Financial Group said that distributors are closer to the advisors and know their needs better. Insurers, through their association, the Canadian Life and Health Insurance Association, have committed to carrying out random inspections of independent advisors across Canada. “An advisor would not really like to receive visits from 18 insurers in the same year,” he suggested.
Stéphane Rochon, president and chief executive officer of Humania Assurance, observes that the changes imposed on investment advisors will end up being imposed on insurance advisors. However, everything happens on average seven years later.
He said the regulator decided that the situation was not manageable and imposed a one dealer relationship for advisors in the mutual fund sector five years ago. He added, “it’s inevitable” that the insurance industry will go in the same direction. “The regulator has already sent a lot of signals in this regard to insurers and advisors,” says Rochon.