Why RIBO’s considering a harmonized standard for broker licensing, and MGA carve-out
The Registered Insurance Brokers of Ontario (RIBO) is working with the Canadian Insurance Services Regulatory Organizations (CISRO) to review property & casualty agent and broker education and training requirements to make recommendations regarding a harmonized standard.
This could take the form of a single, common curriculum for education and training.
A common curriculum, if developed, would outline the educational and training aspects for P&C agents and brokers (but not necessarily the exam aspect at this time), said Jessica Harper, RIBO’s director of policy, licensing and standards. It should also consider a ‘carve-out’ to reflect the unique nature of MGAs, said Steve Masnyk, managing director of the Canadian Association of Managing General Agents (CAMGA).
“RIBO works with the MGA sector to be flexible with our regulatory requirements, where appropriate,” Harper said. “We do have a bit of a carve-out for MGAs in that we ask them to sign an undertaking that states that they are not licensed to deal directly with the public. And, as part of that, we don’t require their underwriters to write the same exams as other brokers do.”
For example, licence candidates would write an ethics exam but not an automobile exam as part of meeting initial licensing qualifications. “When it comes to carve-outs, we made that happen for MGAs recognizing that they are different from brokers,” Harper said.
“We have been working with MGAs… to not subject them to necessarily all of our requirements when we do license them.”
Masnyk says the carve-out he proposed would use CAMGA’s code of conduct as a framework and consider the delegated underwriting authority arrangements between carriers and MGAs. In November 2021, CAMGA unveiled an undertaking that codified minimum business operating standards for P&C intermediaries in Canada. The measures are voluntary but required as part of CAMGA membership.
“I want to emphasize that we are not licensing MGAs as MGAs,” Patrick Ballantyne, CEO of RIBO, told Canadian Underwriter. “If they come to RIBO for a licence, we essentially licence them as brokers, and subject them to the same rules, with some minor exceptions.”
That said, MGAs licensed by RIBO are subject to the same minimum requirements, including: financial reporting, minimum capital requirements, errors and omissions insurance, fidelity bonds and spot checks, Ballantyne noted.
Harper added that RIBO is also looking at reviewing the CMGA (Canadian Managing General Agent) designation “as a potential licensing qualification.”
For CAMGA, Masnyk emphasized MGAs do not trade with the consumer, public or insured. While it’s a broker’s job to represent the consumer, MGAs – who provide underwriting services to brokers on behalf of carriers – shouldn’t be lumped into all the same rules as brokers, he argued.
“As a member of CAMGA, one of the requirements in membership is that the firm does not trade or advise the consumer,” Masnyk said. So, the delegated underwriting arrangement coupled with CAMGA’s code of operating standards “are a sufficient framework to achieve the goals” intended by the RIBO requirements and MGA needs, Masnyk said.
The issue of harmonization was raised during AM Best’s Canada Insurance Market Briefing – Toronto conference last month by George Longo, president and CEO of MGA Excess Underwriting. Longo, who is involved with RIBO’s board, said he hopes harmonization of broker regulation occurs that would help “make regulation of MGAs much easier.”
Feature image by iStock.com/Warchi
