After reading these guidelines, I anticipate significant hair loss for the managers of any MGA.
I have read the guidelines for the insurers in regards to the management of MGAs published by the British Columbia Financial Institution Commission. Don’t get me wrong! I love the guidelines the same way I love to read about space travel. Just at the word “WARP” I get a tingle in my feet.
As much as I like the guidelines, they are off this word and even this galaxy. What were the regulators thinking?
Just read these guidelines and imagine a dozen Insurers trying to apply these guidelines to a single MGA. Imagine each insurer trying to apply its management plan to the MGA. What if they are conflicting guidelines between insurers? What is the MGA to do? In fact based on this proposal as stated in Principle 1; as part of its due diligence, an insurer would have to assess the other insurer’s contracts to define his risk if the MGA failed to perform. In fact the proposal states that the Insurer would have to review the MGA relationship with other insurers that may impact or influence the provision of services. So a MGA could literally be forced to choose between 2 insurers, if one insurer considers the other insurer a risk.
For advisors, it’s even worst. They will fall under the direct oversight of each individual insurer instead of being under the oversight of one MGA and clearly an insurer would have the right to question the business placed with another insurer to identify irregularities.
I love it but it can’t work. There are too many chiefs and one MGA. Yes I love all of these guidelines but I don’t see why these guidelines don’t fall under the responsibility of the MGA with the oversight with the regulator and not the insurer.
Attach are the guidelines: