Amid concerns about compliance and customer treatment in Ontario’s life insurance sector, the Financial Services Regulatory Authority of Ontario (FSRA) is expanding oversight reviews of life agents.
The regulator published the results of two pilot programs that were carried out in 2021 to examine industry compliance, which required action in 70% of the 70 reviews it carried out.
Regulatory actions included agents giving up their licences, warnings, and escalation for possible discipline.
“FSRA identified 105 contraventions of the Insurance Act resulting in formal regulatory findings against 20 life agents (29%),” the regulator said. It found 334 instances of industry best practices not being followed (in reviews of 240 client files) involving over half (56%) of the agents it reviewed.
“These outcomes suggest that life agents need to improve their overall business practices, and that the insurers who are obligated to monitor the intermediaries authorized to sell their products need to review their life agent compliance programs,” the regulator said in its report.
In the year ahead, FSRA is planning to expand its supervisory reviews, with the goal of examining “a reasonable and proportionate volume based on the number of licensed agents in Ontario.”
The regulator also said it intends to consult on the volume of agents it should be aiming to review each year, along with consulting on improving the life agent reporting process and integrating industry best practices into its supervisory reviews.
“Consumers buy life and health insurance to protect themselves and their families against the unexpected. We have developed this new framework to help ensure they are treated fairly and offered products that meet their needs,” said Huston Loke, executive vice-president, market conduct at FSRA, in a release.
FSRA said it expects the new framework to deter misconduct, and to promote industry transparency and disclosure.