Now that it has collected views from across the industry on various issues concerning MGAs, a Canadian Council of Insurance Regulators’ (CCIR) committee is studying these submissions with the intention of preparing a summary report and possibly making recommendations to the country’s insurance superintendents.During an interview at the end of April, Doug McLean, executive director of insurance for B.C.’s Financial Institutions Commission and chair of the Agency Regulation Committee (ARC), which is leading the MGA review for the CCIR, told The Insurance and Investment Journal that presently the committee is analyzing the submissions.
“My plan is to complete our analysis of the submissions and then the Agency Regulation Committee would meet to go over them and we would provide a summary and some possible recommendations to the CCIR at its summer conference call, which would be toward the end of June.”
The superintendents will then have to make a decision on whether they want to proceed with making conclusions or recommendations based on the information compiled by the ARC committee and whether they want to issue a position paper on MGAs and the life distribution model, adds Mr. McLean. “That would be a public document if they choose to go down that route. It would be available for consultation.”
If the superintendents do decide to release a position paper, would that mean new regulation? Mr. McLean says the paper would be made available to the provinces and if there are legislative changes needed, then those jurisdictions will have to make up their own minds in regards to whether they want to amend their legislation. Also, “some guidance might come out of a position paper from the standpoint of issuing expectations by the superintendents, which would simply be some guidance to the industry,” he added.
Has the CCIR committee learned much so far from the MGA review? Mr. McLean says that part of this consultation process is to educate and build a common understanding of this topic. “What’ve learned here is it is a complex distribution model from the standpoint of the different players and how the accountability has been spread in the distribution channel between the advisors versus the MGA, versus the life insurance companies. So it’s been an educating process for us regulators…”
Property and casualty industry
In addition to this review, Mr. McLean says the ARC committee has already embarked on a similar review of the property and casualty industry from the standpoint of its use of MGAs within its distribution model. “The work plan for the committee was to look at the use of MGAs on both the life and property and casualty side. We’re just starting the second part of the work plan.”
He believes the process for the P&C review will be similar to the one being carried out for MGAs in the life insurance industry. He expects the committee will release an issues paper and launch a similar consultation process.