Comments on FSRA’s updated proposed Rule 2025-001 – Life and Health MGAs

Independent Financial Brokers of Canada (IFB) is pleased to provide feedback on FSRA’s updated proposed Rule 2025-001 – Life and Health Managing General Agents (MGAs).

Nov 19, 2025

Financial Services Regulatory Authority of Ontario (FSRA)
25 Sheppard St. W., Suite 100
Toronto ON M2N 6S6

Submitted via FSRA Portal

RE: Consultation on FSRA’s updated proposed Rule 2025-001 – Life and Health Managing General Agents

Dear Sir or Madam,

Independent Financial Brokers of Canada (IFB) appreciates the opportunity to comment on FSRA’s proposed Rule under Part XIV.1 of the Insurance Act (the “Proposed Rule”) relating to Managing General Agents (MGAs) in the life and health insurance sector. IFB represents approximately 2,000 licensed agents and brokers, the majority of whom are licensed in Ontario.

We appreciate and support FSRA’s continued efforts to enhance consumer protection, clarify expectations across the distribution chain, and align oversight with modern distribution practices. We share FSRA’s objectives of ensuring that insurers, MGAs, and agents operate with robust compliance systems and clear accountability.

Our comments focus primarily on one key issue: the risk that the Proposed Rule, as drafted, will unintentionally capture ordinary corporate agencies and incorporated agents as MGAs, even though they do not perform the kind of distribution-level MGA functions that the Rule is intended to regulate.

Support for FSRA’s objectives

We agree that:

• It is appropriate for FSRA to clearly define the roles and responsibilities of insurers and MGAs in screening, training, supervising, and monitoring agents and prospective agents;
• MGAs that operate at scale and act as an intermediary layer between insurers and large networks of agents should be subject to explicit regulatory expectations; and,
• Improved clarity around delegation, oversight, and accountability can benefit consumers, regulators, and industry participants.

Our concern is not with the purpose of the Proposed Rule, but with how broadly some of the definitions and application provisions are drafted, and the resulting impact on smaller advisory practices that use a corporate structure.

Concern: Corporate agencies and incorporated agents unintentionally captured as MGAs

The combination of several provisions in the Proposed Rule risks bringing ordinary corporate agencies and incorporated agents into the MGA regime, even when they do not function as MGAs in the commonly understood sense.

These include:

• The broad definition of “MGA licensed activities”, which extends beyond traditional MGA functions to include “supervising, training or monitoring the activities of prospective agents”;
• The statement that the Rule applies not only to licensed MGAs, but also to entities that do not hold an MGA licence but perform any MGA licensed activity; and
• The concept of “acting as a managing general agent in Ontario” where an entity facilitates the sale of insurance by supervising, training, or monitoring prospective agents under an agreement.

In practice, many small corporate agencies and incorporated life/health agents:

• Operate through a corporation for tax, liability, business continuity, or succession reasons; and
• Employ or contract with a small number of downline agents or prospective agents, providing them with basic oversight, mentoring, or practice-level training.

Under the current drafting, these ordinary corporate practices can be interpreted as performing “MGA licensed activities” and “acting as an MGA,” even though they:

• Do not design or control distribution systems on behalf of insurers;
• Do not operate at an intermediary layer between insurers and large, regional or national networks of advisors; and
• Do not have the scale, infrastructure, or risk profile that FSRA’s consultation materials describe as characteristic of MGAs.

In substance, these entities are retail advisory practices that happen to be incorporated and that support a small team. Treating such practices as MGAs would be inconsistent with how the market understands the term and, in our view, inconsistent with FSRA’s stated policy intent.

Regulatory burden vs. consumer benefit

If these corporate agencies and incorporated agents are deemed to be MGAs solely because they supervise, train, or mentor a small number of agents or prospective agents, they would be required to:

• Obtain an MGA licence (in addition to their existing Corporate licence and, in some cases, their individual agent licence);
• Designate a Designated Compliance Representative (DCR) and implement a formal MGA-level compliance system;
• Maintain additional insurance coverage and internal controls appropriate to “MGA risk”, in addition to the Corporate E&O and, if applicable, individual advisor insurance, they already carry; and
• Meet new reporting and filing obligations.

For small and mid-sized advisory practices, these requirements would be disproportionate to their size and role in the distribution chain and would create significant cost and administrative burden. We are concerned that this would:

• Discourage advisors from incorporating, even though incorporation can support better business continuity, succession planning, and professionalization;
• Divert limited resources away from front-line client service into duplicative compliance infrastructure; and
• Create confusion among advisors, insurers, and consumers about who is actually functioning as an MGA versus who is simply a corporate advisory practice.

We do not believe this added burden would produce a meaningful improvement in consumer protection, given that:

• These practices are already captured as agents under existing regulatory frameworks; and
• Insurers remain responsible for screening, training, and oversight of agents who are authorized to sell their products, regardless of whether those agents are incorporated.

A Proposed Approach

We believe that the final Rule and/or related guidance should clarify that:

1. Corporate agencies and incorporated agents whose primary business is acting as a licensed agent for their own clients, and whose supervision of other agents or prospective agents is limited and practice-specific, are not MGAs for the purposes of this Rule.
2. Entities should only be treated as MGAs where they perform distribution-level functions on behalf of insurers, such as:
   • Operating at an intermediary layer between insurers and a broader network of agents;
   • Providing distribution, compliance, training, and monitoring services to a wider group of advisors across multiple firms or regions; anD
   • Having a scale and risk profile consistent with the types of MGAs described in FSRA’s consultation materials.

We believe this clarification would preserve FSRA’s ability to regulate MGAs appropriately and hold them accountable for their significant role in the distribution chain. It would also avoid unintentionally bringing corporate agencies and incorporated advisors into the MGA regime where they do not pose MGA-type risks and support the continued health and professionalism of small and mid-sized advisory practices that provide front-line service to consumers.

To do this, we recommend that FSRA take a two-track approach that will minimize the unintended consequences in the short term and then take the necessary steps to amend the Act in the longer term.

Short-term: Use the MGA Rule and accompanying Guidance to clarify that small corporate agencies with limited downlines are not expected to obtain MGA licences where they are not carrying out true MGA functions.

Medium/long-term: Support a targeted technical amendment to s.407.2 so that the statute itself clearly distinguishes MGAs from small corporate agencies.

Short-term: FSRA Rule and Guidance Changes

(A) Define and carve out “Excluded corporate agencies” in the Rule

We recommend that FSRA add the following concepts to the MGA Rule:

“Corporate life insurance agency” means a corporation or partnership that holds a licence as a life insurance agent or as a life insurance and accident and sickness insurance agent under Ontario Regulation 347/04 (Agents) made under the Act.

“Excluded corporate agency” means a corporate life insurance agency that:

• has entered into written agreements with only a small number of individual agents who sell or solicit life or accident and sickness insurance;

• does not have any agreement with an insurer, managing general agent or sub-managing general agent under which it is responsible for, or compensated in respect of,

1. 1. screening agents or prospective agents for suitability,

   2. providing or delivering mandatory product or regulatory training to agents,

   3. supervising or monitoring the activities of agents on behalf of an insurer, or

   4. recommending agents to insurers;

• does not hold itself out to insurers, agents or the public as a managing general agent, associate general agent, national account or similar intermediary; and,

• receives no compensation that is calculated primarily by reference to the aggregate volume of business placed by a broad network of advisors, other than commission or fees payable as agent of record for business written through the corporate life insurance agency.

We further recommend that FSRA add a clarifying subsection like the following:

For the purposes of this Rule, an Excluded corporate agency shall not, solely by entering into written agreements with its associated individual agents, be considered to be carrying on any MGA licensed activity or acting as a managing general agent in Ontario.

Importantly, this approach does not undermine s. 407.2. Instead, it recognizes that there is a meaningful difference between:

• a small corporate agency acting as agent of record for a limited team of advisors; and
• a large MGA/AGA platform performing core MGA functions across a broad advisor network and multiple insurers.

FSRA can retain flexibility by leaving “small number” to be refined in future (for example, through subsequent targeted consultation or supervisory guidance) rather than hard coding a specific figure at this stage.

Clarify supervisory expectations in Guidance

To provide immediate relief and certainty, FSRA could issue Interpretation/Approach Guidance stating, in substance, that it will not generally expect a corporate life agency to obtain an MGA licence where:

• the corporation or partnership is already licensed as a life or life/A&S agent under O. Reg. 347/04;
• it contracts with only a limited number of individual agents (for example, its owners, partners and a small number of agents);
• it has no agreement with any insurer, MGA or sub-MGA to perform agent screening, suitability assessment, mandatory product training, or ongoing supervision and monitoring on the insurer’s behalf;
• it does not hold itself out as an MGA, AGA, national account or similar distribution intermediary; and
• its compensation is primarily that of an agent of record, not an override based on the production of a wide advisor network.

FSRA could reinforce this with a concrete example in Guidance:

Example: A licensed corporate life insurance agency has several shareholder agents and a small number of downline advisors who place business through the corporation. The corporation has no distribution agreement with any insurer to recruit, screen, train or supervise agents, and is not paid overrides based on a broader advisor network. FSRA would not generally expect this entity to obtain a managing general agent licence.

This kind of Guidance is fully consistent with FSRA’s risk-based, proportional approach and its stated goal that the MGA Rule “minimize regulatory burden with a tiered approach that differentiates obligations.”

Medium/long-term: Targeted amendment to s. 407.2

We recognize that FSRA cannot amend the Insurance Act. However, we believe the experience of implementing the MGA Rule will quickly demonstrate the need for a technical clarification in s. 407.2.

We suggest that FSRA:

• Flag to the Ministry of Finance that small corporate life agencies are being inadvertently swept into the MGA definition, creating unnecessary cost and complexity for small practices and their clients;
• Support a future legislative amendment that would:
  • Confirm that a corporation or partnership holding a life or life/A&S agent licence does not become an MGA solely because it contracts with a limited number of individual agents and provides shared administrative services; and,
  • Preserve MGA status where a corporate entity actually takes on screening, training, supervision, recommendation, or broad override-based distribution functions.

We believe that this will maintain strong consumer protection while avoiding unintended consequences for small, independent practices.

This approach would align the framework with its policy intent: regulating true MGAs and sub-MGAs, while avoiding disproportionate burden on small independent practices.

FSRA’s Oversight Role Needs to be Clearly Defined

The Rule is silent on the role that FSRA will play in the new MGA licensing regime. It is important to all stakeholders that FSRA retain a clear role in the supervision of those it licenses. For clarity, we would like to see the role and responsibility of FSRA set out in the Rule.

Conclusion

We support FSRA’s objectives in developing a clear, modern framework for MGAs and agree that strong expectations for screening, training, supervision, and compliance are important for consumer protection.

Our request is that FSRA refine the scope of the Proposed Rule so that it captures the entities it is truly intended to regulate—those performing distribution-level MGA functions on behalf of insurers—without unintentionally imposing an MGA regime on ordinary corporate agencies and incorporated agents whose role remains that of a retail advisory practice.

We would be pleased to discuss these comments further or to participate in discussions FSRA may convene as it finalizes the Rule.

Thank you for the opportunity to provide input.

Yours truly,

Nancy Allan
Executive Director, Independent Financial Brokers of Canada
E: allan@ifbc.ca