CAMGA sets minimum business operating standards for MGAs

The Canadian Association of Managing General Agents (CAMGA) has established a regulatory standard setting regime which sets minimum business operating limits for managing general agents (MGAs) in Canada.

According to CAMGA, the standards’ goals are threefold: to ensure that premiums monies are managed responsibly; to enable MGAs to meet and exceed professional indemnity coverages; and to provide explicit transparency to carriers that support the MGAs’ underwriting.

The association also outlined an undertaking for MGAs that wish to ascribe to the new operating standards:

• To agree to be licensed as an insurance intermediary in those jurisdictions that mandate it 
• To carry errors & omissions insurance that meets or exceeds the mandated minimum standards in every jurisdiction in which the member carries out business, as applicable to insurance intermediaries  
• To carry a fidelity bond in those jurisdictions where it is mandated  
• To maintain a properly constituted trust account for the deposit of insurance premiums received from any source in those jurisdictions where it is mandated
• To ensure that the MGA obtains from the broker/agent a copy of the required Consent & Acknowledgement of Risk Form for all insurance placed with a non-licensed carrier signed by the consumer prior to binding the risk. 
• To endeavour to notify the broker of all non-renewals a minimum of 45 days prior to the renewal date
• To explicitly inform the broker at the quoting stage of the carrier(s) relied on for the quote 
• To notify CAMGA within 30 days of the breach of any of the foregoing undertakings in every jurisdiction in which the member carries on business

“With the voluntary adoption of this undertaking by our members, the brokerages and insurers that we deal with can be assured that these basic best practices are adopted and adhered to by our member MGAs,” said CAMGA managing director Steve Masnyk.

Masnyk added that there has been “too much noise in the industry” as of late in regards to the absence of standard operating procedures and transparency when it comes to MGAs, so the new regulation is a step towards addressing those issues.

“These standards are in addition to the strict oversight brought by our carrier partners in the underwriting services we provide,” said CAMGA president Marykate Townsend. “The broker and carrier partners we trade with will now be aware of the standards CAMGA member MGAs follow and be confident that this framework adds even more professionalism into the underwriting activities of MGAs.”