Key stakeholders in the Canadian life insurance industry are looking to establish a screening, contracting, and monitoring model for life insurance advisors.
Their consultation comes after the Canadian Council of Insurance Regulators (CCIR) released its final position paper in November on strengthening the Managing General Agents (MGA) life insurance distribution market. MGAs are individuals or businesses appointed by an insurer to solicit applications from agents for insurance contracts or to negotiate insurance contracts on behalf of the insurer.
The CCIR paper noted that “there seems to be a lack of understanding by the public of the safeguards in the system which has led to expressions of concern as to whether agents are receiving adequate and effective supervision.” It further recommended that insurers take responsibility for the oversight of tasks outsourced to MGAs.
“Having seen the industry and regulators all agree that there is room for change and improvement, LOGiQ3 has been investigating a potential independent life advisor screening, contracting and compliance monitoring model,” said LOGIQ3, which provides life insurance and reinsurance outsourcing and consulting services.
“The model would provide independent advisors, MGAs and carriers with an industry standard service model that could provide more effective and efficient processes and at the same time address some of the recommendations from the recently released [CCIR] position paper.”
The model under discussion would allow an industry standard approach, identifying which parties are responsible for overseeing the various functions of a life insurance advisor’s duties. It would also provide a verifiable and auditable process, addressing industry needs.
Several MGAs, representing a significant share of the Canadian distribution market, have been involved in helping LOGiQ3 investigate the feasibility and viability of this model along with a significant number of carriers. In addition to this, LOGiQ3 is providing briefings to and seeking input from the life insurance industry and advisor associations.
“For carriers and distributors, the elimination of current duplication of processes should result in overall savings and deliver superior risk management results,” LOGIQ3 said. “While for advisors, the standardized approach will result in reduced disruption to their business, better service standards and a locked-down, private and secure web page for them to keep all their professional practice information in one place and a place to receive and store valuable best practice information and education.”
LOGiQ3 said it anticipates the first part of the investigation to be completed in the first quarter of 2013. At that time, it added, “the key parties will collectively decide with all stakeholders involved if the model is viable, meets the needs of the various stakeholders and will be implemented, or, if it needs more investigation, or, if the model needs to be completely revamped and reinitiated.”