Insurance industry insiders are keeping the discussion going on the article ‘Potential for conflict of interest is there,’ on the growing popularity of MGAs, and calls for regulation by one broker.
“As an Independent MGA, I understand the broker’s comment,” wrote Nona McCreedy, of Aurora Underwriting Services Inc. “Commenting on his other comment, those of us domiciled in other provinces are required to be licensed in our home jurisdiction and maintain the required hours of education.”
It was Greg Shields who commented on the article that started it all, ‘Growing popularity of MGAs demands regulation: broker,’ stating that “most insurance buyers, personal and commercial, are not aware of unique relationships between their advisor(s) and insurers; and they make the reasonable, but unfortunately incorrect, assumption that government regulators are actively monitoring these relationships and the business activities of the many parties to the transaction.”
Bruce Rabik, of Rogers Insurance, felt that conflict of interest – or even the appearance of conflict of interest – should be a concern of everyone, perhaps demanding something above and beyond simple regualtion.
“Conflict of interest should be a concern to responsible people in our industry. For example most brokerages in our industry appear to accept bribes (OK, call
them incentives) to place business with certain insurers in clear violation of their duty to place a client where their best interests demand,” wrote Rabik. “Brokerages do not have to disclose clear conflicts when they are owned by one insurer or owe a lot of money to that insurer in most provinces. Yet brokerages are regulated. So clearly the answer is not simply regulation. The starting place is a real conversation in this industry as to whether we supply professional services and therefore must be held to professional standards or whether we are simply sales people who should be expected to behave like any other sales people.”
Another broker who participated in the Rating MGAs Survey – which will be featured in the October issue of Insurance Business magazine – observed that “brokers are required to have so many hours of training and insurers are required to have a license. MGAs are currently operating in a sort of grey area. As brokers turn to MGAs more and more – sometimes on a daily basis – there will be a need for some sort of regulation.”
That broker spoke to Insurance Business on the condition of anonymity.
