On November 6, 2024, Bill 216, the Building Ontario For You Act (Budget Measures), 2024, received Royal Assent. The Bill implements amendments to Ontario’s Insurance Act (the “Act”) which establish a new licensing regime for managing general agents operating in the life and accident and sickness insurance sectors in Ontario (“MGAs”).
The amendments, when proclaimed in force, will require entities that are acting as MGAs in Ontario, to obtain a separate licence that will be issued by the Financial Services Regulatory Authority of Ontario (“FSRA”). The amendments specify that a person or entity will be acting as an MGA in Ontario when engaging in any of the following activities, or holding themselves out as doing so:
- Recruiting agents or prospective agents.
- Screening agents or prospective agents to confirm the agent is suitable to carry on business as an agent.
- Providing training to agents.
- Supervising or monitoring the activities of agents.
- Entering into written agreements with agents who sell or solicit life insurance or accident and sickness insurance.
- Recommending agents to insurers to sell or solicit life or accident and sickness insurance.
- Transmitting an insurance application or a policy of insurance between an insurer licensed for classes of life or accident and sickness insurance and an agent.
- Such other activities and functions as may be prescribed by FSRA rule.
MGAs will be required to establish and maintain a compliance system that is reasonably designed to ensure that the MGA and any of its sub-MGAs and agents comply with the requirements of the Act, its regulations and applicable FSRA rules. They will also be required to appoint a designated compliance representative. The Act will also require insurers to establish and maintain their own compliance systems which are designed to ensure that MGAs that have entered into an agreement with the insurer are complying with their requirements under the Act, its regulations and applicable FSRA rules.
Insurers will be required to notify FSRA within 30 days of entering into an agreement with an MGA, and provide FSRA with copies of all agreements that it enters into with MGAs, including any amendments. In the event than an agreement between and insurer and MGA is terminated, the insurer will also be required to notify FSRA within 30 days and provide FSRA with the reason for the termination.
The amendments give FSRA broad rule making power with respect to establishing standards of practice for MGAs, including record keeping requirements, eligibility requirements for MGAs’ compliance representatives, and requirements related to the compliance systems of MGAs and insurers.
The full text of Bill 216 and the amendments to the Act can be found at this link. The amendments to the Act which will implement the new MGA licensing requirements, will come into force on a date to be named by proclamation of the Lieutenant Governor. Based on information provided in a consultation paper that the Ontario Ministry of Finance published in July of this year, we anticipate that the new licence requirements will come into force sometime in 2026, following the publication of associated regulations and any related FSRA rules.
