Bringing together the nation’s managing general agencies into one association is a logical step, says one MGA; but to succeed it will need to be proactive on the regulatory front.
“That is the approach I’ve always taken on that, to be proactive, whether it is on licensing or other internal, corporate things we need to think about – like compliance,” says Phil Baker, president of Creechurch. “We need to show that we can self-regulate as effectively, or more effectively, than an external entity that doesn’t fully understand our business model. The brokers do that with their provincial associations in terms of best practices, and insurers certainly do that.”
Baker has been one of the many MGA owners who have attended meetings throughout the year with the ultimate goal of forming a national MGA association.
“You have broker associations; you have insurer-backed associations – it seems logical that you would have an MGA association as well,” he told
Insurance Business. “We want to make sure that we as a group continue to offer the best service and the best products, so the MGA model remains a viable distribution channel for insurers; so we’re not competing with them, but working with them.”
Ensuring the current MGA model remains viable means taking the lead on best practices and self-regulation, stresses Baker.
“It is an unusual situation for an MGA,” says Baker. “On the life and health side it is a different issue; on the property and casualty side – especially in provinces like Ontario – we don’t even need to be licensed. We are; we choose to be – we choose to be licensed by the broker bodies in all provinces where it is required.
“We want to protect our interests with the regulators to make sure they understand how we deliver our product,” continues Baker, “so we don’t take on any unnecessary regulation that is going to get in the way of distributing our products efficiently and serving our clients.”
What would prove the undoing of Canada’s MGAs would be a scenario involving imposed regulations by a regulator who doesn’t understand the market dynamic, says Baker – for example, the regulations surrounding capital requirements.
“I terms of capital requirements, my response to that is ‘We don’t have capital.’ It is not our capital, it is the insurer’s capital, and they are regulated by FSCO or OFSI domestically,” he says. “To put capital requirements on an MGA makes no sense – any more than it would to place capital requirements on brokers. I would hope we don’t go in that direction, and it is something that as an association or organization we would engage with any regulators who are thinking that.”
