FSRA Releases Revisions to the Proposed Regulatory Framework for Ontario Life and Health MGAs

On October 20, 2025, the Financial Services Regulatory Authority of Ontario (“FSRA”) published a substantially revised version of its Rule 2025-001 – Life and Health Managing General Agents (the "Rule”). FSRA stated that many of the changes in the revised Rule respond to stakeholder comments that the original version of the Rule contained ambiguities and imposed compliance obligations that were overly burdensome relative to the anticipated consumer protection benefits, particularly for small and mid-size organizations. The revised Rule introduces changes intended to address these issues, including clarification of certain provisions and adjustments to compliance obligations.

The comment period on the revised Rule ends on November 19, 2025.

Background

As discussed in our February 25, 2025 post, Rule 2025-001 is intended as a licensing and compliance framework for Life and Health Managing General Agents (“L&H MGAs”). It builds on 2024 amendments to Part XIV.1 of Ontario’s Insurance Act (the “Act”) that created a separate licensing class for L&H MGAs. FSRA’s intention is to ensure that Ontario consumers can expect the same high level of compliance and competence from all agents affiliated with an L&H MGA. Under the Rule, insurers have overall responsibility for compliance throughout their distribution network although if adequate monitoring is in place, they may generally rely on the compliance systems established by L&H MGAs. Note that those compliance systems apply to agents of the L&H MGAs and to agents of their sub-MGAs that are authorized to sell or solicit the insurer’s insurance products.

Key Provisions

The following are some of the most impactful provisions in the proposed Rule, many of which have been substantially changed in the revised Rule.

Multiple tiers of L&H MGAs

The revised Rule divides L&H MGAs into three groups in response to stakeholder comments that the original, one-size-fits-all, regulatory approach was unrealistic:

• Tier 1 MGA – recruits, screens, trains and/or monitors agents who are (or will be) authorized to sell individual life, accident or sickness insurance pursuant to an agreement with an insurer;
• Tier 2 MGA – same as Tier 1, except that it performs the listed activities pursuant to an agreement with another L&H MGA (and not with an insurer); and
• Tier 3 MGA – any L&H MGA that does not fall into either of the other Tiers.

The revised Rule further clarifies that MGAs that are “Tier 1” with respect to some insurers or products and “Tier 2” with respect to other insurers or products must follow the “Tier 1” standards in the first case and the “Tier 2” standards in the second case. (section 1)

Clearer and more flexible requirements for Designated Compliance Representatives

In response to stakeholder feedback, requirements relating to the appointment and duties of an L&H MGA’s Designated Compliance Representative (“DCR”) have been reworked. Specifically:

• For Tier 1 and 2 MGAs, the requirement that the DCR be an officer or partner of the L&H MGA has been replaced with a simpler requirement that the DCR be an individual who is qualified (in terms of ability, knowledge, experience and character) and has adequate authority and resources to fulfill his or her responsibilities (the revised Rule adds the reference to “resources”, which was not present in the original Rule);
• With respect to Tier 3 MGAs, the revised Rule states that such entities can appoint anyone to act as DCR unless there is a reasonable ground to believe that the proposed DCR will not perform the duties according to law and with integrity and honesty (under the original Rule, Tier 3 MGAs, like all MGAs, would have had to appoint an officer or partner as DCR); and
• The DCR’s duties are further clarified in the revised Rule, notably the requirement to implement, monitor and update the L&H MGA’s compliance system (discussed below) and the duty to deal with contraventions of law. (section 7)

Less onerous agent recruitment requirements

The standards relating to agent recruitment have been modified:

• The requirement to have processes in place to deal with conflicts of interest has been removed;
• Tier 1 and 2 MGAs that are recruiting agents or prospective agents must implement a recruiting process that is designed to ensure that prospective agents do not act as agents until they are licensed, trained and authorized to act for the relevant insurer(s) and there must be reasonable grounds to believe that such agents and prospective agents will act in accordance with applicable laws; and
• In addition, Tier 2 MGAs that recruit agents or prospective agents to sell individual insurance must implement a recruitment process that is designed to ensure that the Tier 1 MGA can access the information it requires to fulfil the obligations referred to immediately above.

In response to stakeholder comments, the revised Rule adds a provision stating that these recruitment processes should be designed with regard to the size, complexity, operations and risk profile of the L&H MGA (considered in light of its use of sub-MGAs in distributing individual insurance) and the sub-MGA and agents associated with the L&H MGA.

The recruiting requirements in the Rule do not apply to Tier 3 MGAs, removing a burden that would have been imposed by the original Rule. (section 9)

Clarified screening requirements

The revised Rule clarifies requirements relating to the screening of agents, as they apply to both insurers and L&H MGAs in the three Tiers, particularly with respect to the extent of the insurer’s ability to delegate activities related to screening.

Screening by insurers

The revised Rule makes the following clarifications with respect to suitability assessments:

• Any insurer associated with a Tier 1 or 2 MGA must implement a process to ensure that no agent or prospective agent associated with that insurer performs activities requiring an agent’s licence until the insurer (having reviewed sufficient information) has determined that the person is suitable to act as an agent; and
• One important change introduced by the revised Rule is an alternative process that applies only to non-sponsored agents. In such cases, an insurer is allowed, if desired, to delegate the suitability assessment to a Tier 1 MGA that (having reviewed sufficient information) has determined that the person is suitable to act as an agent.

The revised Rule clarifies that any or all activities related to screening, other than suitability assessments of sponsored agents (as discussed above), may be delegated by the insurer to a Tier 1 MGA, and further that the insurer may rely on the information that the Tier 1 MGA provides, where the insurer’s process is reasonably designed to confirm that the Tier 1 MGA’s compliance system:

• is designed to confirm that the delegated activities conform to the agreement between the Tier 1 MGA and the insurer (in addition to any further instructions from the insurer, and all applicable law);
• is reasonably designed to ensure that the information the Tier 1 MGA provides to the insurer is accurate and complete;
• includes an assessment of whether the Tier 1 MGA’s compliance system can be relied on where the Tier 1 MGA delegates any relevant activities to a Tier 2 or 3 MGA; and
• the insurer is satisfied that the Tier 1 MGA’s compliance system can be relied upon for the purposes described above, and despite any delegation to Tier 2 or 3 MGAs, or, if it is not satisfied, the insurer takes appropriate, timely and effective action to address any gaps. (section 10)

Screening by L&H MGAs

The revised Rule also clarifies the role of the L&H MGA in the screening of agents, in particular by creating distinct requirements for Tier 1 MGAs, on the one hand, and Tier 2 and 3 MGAs, on the other:

• If an insurer delegates any responsibility relating to screening to a Tier 1 MGA (as described above), the Tier 1 MGA must implement a process to ensure that no agent or prospective agent with which it is associated performs activities requiring an agent’s licence until the insurer (or the Tier 1 MGA, if this particular responsibility has been delegated to it) has concluded that the person is suitable to act as an agent (having reviewed sufficient information to make such a recommendation);
• A Tier 1 MGA can delegate information-gathering activities to Tier 2 and 3 MGAs, provided that it has a process in place to ensure that those activities are carried out in accordance with applicable laws, but it cannot delegate to Tier 2 and 3 MGAs the power to make suitability decisions or recommendations;
• Tier 2 and 3 MGAs to which activities are delegated are also required to follow applicable laws in doing so (and, in some situations, to establish processes for doing so), as set out in the revised Rule; and
• All L&H MGAs, of any tier, must share information with insurers about the suitability of agents and prospective agents with whom they are associated (and who are authorized to sell the insurer’s products), and must also share information with other L&H MGAs, of any tier, that are associated with those agents or prospective agents.

Here, as elsewhere, the revised Rule adds flexibility for smaller MGAs, stating that an L&H MGA’s screening process is expected to reflect the size, complexity operations and risk profile of the L&H MGA and any sub-MGAs with which it is associated. (section 11)

Training of agents

The revised Rule provides further clarity about requirements relating to the training of agents, as they apply to both insurers and L&H MGAs.

Training by insurers

Any insurer that is associated with a Tier 1 or 2 MGA must implement a process designed to ensure that:

• It creates training materials relating to its insurance that are clear, accurate and not misleading;
• The training materials address each product’s key features, costs, terms, conditions and exclusions;
• The materials are provided to L&H MGAs, of any tier, that are associated with the insurer or (in the case of Tier 3 MGAs) with agents authorized to sell the insurer’s individual insurance; and
• Agents associated with the insurer complete training that enables them to understand their obligations under insurance law including with respect to continuing education and also the key features, costs, terms, conditions and exclusions of the products they will be authorized to sell.

The revised Rule focuses on ensuring that agents understand the features and costs of the insurer’s products, a change from the original Rule, which included specific requirements (removed from the revised Rule) that required agents to be able to explain the appropriateness of each product for different types of clients.

Delegation of training activities to Tier 1 MGAs (but not to Tier 2 or 3 MGAs) is allowed under the revised Rule if specified safeguards are in place. While the revised Rule requires the insurer to have processes in place to ensure the quality of such delegated training, it removes the original Rule’s requirement for the insurer to review the training and confirm that it is compliant with insurance law. (section 12)

Training by L&H MGAs

The revised Rule continues to deal with the training obligations of L&H MGAs but is more flexible and process-focused than the previous version. Notably, it eliminates the proposed requirement that the insurer pre-approve all L&H MGA training materials relating to its products. Under the revised Rule, Tier 1 MGAs:

• Must (if they have been delegated any responsibility to train agents or prospective agents):
  • implement a process that ensures that all such training is clear, accurate, not misleading and consistent with the outcomes set out in the Rule;
  • implement a process that ensures that the agents associated with the Tier 1 MGA understand and are able to explain the products they will be authorized to sell – including their key features, costs, terms, conditions and exclusions – as well as their obligations under applicable insurance law;
  • implement a process designed to ensure that their training activity accords with their agreement with the insurer, with any instructions from the insurer, and with all applicable insurance law;
  • provide all relevant training materials to Tier 2 and 3 MGAs, agents and prospective agents that are associated with the Tier 1 MGA; and
  • provide the insurer with reports and information related to the relevant training of all agents and prospective agents associated with the Tier 1 MGA.
• Must notify insurers of any changes made to insurer’s training materials by itself or any associated Tier 2 or 3 MGA (either at the insurer’s request or in accordance with any arrangement that may have been agreed to by the insurer and the Tier 1 MGA).

In addition:

• The revised Rule permits a Tier 1 MGA to delegate training responsibilities to Tier 2 and 3 MGAs if the Tier 1 MGA’s training process is designed to ensure that the delegated activities will be carried out in accordance with applicable insurance laws, including the revised Rule.
• The revised Rule sets out a set of responsibilities for Tier 2 MGAs to which training powers are delegated that are similar to those described above with respect to Tier 1 MGAs and extends similar requirements to Tier 3 MGAs.
• There is also a requirement that all L&H MGAs involved in training must provide reports and share information about that training with the insurer (on request) and also with any other Tier 1 or 2 MGA that is associated with agents or prospective agents involved in the training.

As is the case elsewhere in the revised Rule, in response to concerns expressed relating to smaller MGAs, the L&H MGA’s training process is expected to reflect the size, complexity, operations and risk profile of the L&H MGA and any sub-MGAs with which it is associated. (section 13)

Agents’ obligations

The revised Rule takes a more general and flexible approach to the obligations of agents. The responsibilities of an agent who is associated with one or more L&H MGAs now include:

• Ensuring that he or she does not act as an agent with respect to individual insurance unless he or she (i) is a licenced agent, (ii) has completed all relevant training under the revised Rule, and (iii) is authorized (in writing or otherwise) by the relevant insurer to sell the relevant insurance. (The provision in the original Rule relating specifically to the management of conflicts of interest has been deleted.)

The revised Rule also requires any agent associated with an insurer or L&H MGA to provide, on request, any information or documentation relevant to assessing the agent’s suitability. This provision has been shortened and is now more general than in the original Rule, which had referred to specific documents such as “files with respect to specific insureds … and prospective insureds”. (section 14)

Compliance systems

The revised Rule provides further details about insurers’ and L&H MGAs’ compliance systems which address concerns that the original Rule, which included only a very brief section on compliance systems, was insufficiently clear about FSRA’s expectations.

Insurers’ compliance systems

An insurer’s compliance system must be designed to achieve the outcomes set out in s. 407.10 of the Act, in addition to the outcomes set out in this Rule. Such a system is expected to reflect the size, complexity, operations and risk profile of the insurer and the L&H MGAs, sub-MGAs and agents associated with it. Specifically:

With respect to agents, the Rule requires that an insurer have a system designed to ensure that:

• agents associated with the insurer are compliant with all applicable insurance law;
• agents associated with the insurer are subject to ongoing monitoring for suitability and that, if there are reasonable grounds to believe that such an agent is unsuitable, the insurer makes a report with the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (the “Chief Executive Officer”); and
• data relating to agent conduct is monitored to identify patterns that could indicate non-compliance, any data or trends that suggest non-compliance are investigated, and any non-compliance is rectified in a timely and effective manner.

With respect to Tier 1 MGAs, the Rule requires that an insurer’s required compliance system under s. 407.10 of the Act be designed to ensure that:

• Tier 1 MGAs associated with the insurer are compliant with all applicable insurance law;
• Before entering into an agreement with a prospective Tier 1 MGA, the insurer will conduct a suitability investigation;
• Tier 1 MGAs are subject to ongoing monitoring for suitability or licensing issues and , if there are reasonable grounds to believe that the Tier 1 MGA is unsuitable, the insurer makes a report with the Chief Executive Officer and rectifies the unsuitability in a timely and efficient manner; and
• The system includes a client service continuity plan, as described in the Rule, for clients of an L&H MGA that is unable to continue in that role.

An insurer must, on request, provide reports to and share information with an associated Tier 1 MGA, to the extent that that information is relevant to the fulfilment of the Tier 1 MGA’s obligation to establish and maintain a compliance system under the Act. The insurer may also delegate certain activities (notably agent monitoring and data collection) to a Tier 1 MGA if and only if the insurer’s system is designed to confirm the reliability of the Tier 1 MGA’s system, taking into account any delegation by the Tier 1 MGA to Tier 2 or 3 MGAs (or, if the system is not reliable in some respects, the insurer takes appropriate action to address the gaps). The insurer may not delegate compliance activities to Tier 2 or 3 MGAs. (section 15)

L&H MGAs’ compliance systems

An L&H MGA’s compliance system must be designed to achieve the outcomes set out in s. 407.4(7) of the Act, in addition to the outcomes set out in this Rule. Such a system is expected to reflect the size, complexity, operations and risk profile of the L&H MGA and the sub-MGAs and agents associated with it. Specifically:

• With respect to agents, the Rule requires that a Tier 1 MGA’s compliance system be designed to achieve the following outcomes with respect to agents associated with the Tier 1 MGA:
  • the agents comply with all applicable insurance law;
  • the agents are subject to ongoing monitoring for suitability; and
  • if the Tier 1 MGA has reasonable grounds to believe that an agent is not suitable, it will provide a report to the Chief Executive Officer and rectify the unsuitability in a timely and effective manner.
• With respect to individual insurance, a Tier 1 MGA’s compliance system should be designed to achieve the following outcomes:
  • data relating to agent conduct is monitored to identify patterns that could indicate non-compliance, any data or trends that suggest non-compliance are investigated, and any non-compliance is rectified in a timely and effective manner;
  • Tier 2 and 3 MGAs associated with the Tier 1 MGA comply with all applicable insurance law, are monitored on an ongoing basis with respect to suitability and licensing status, and are reported to the Chief Executive Officer if the Tier 1 MGA has reasonable grounds to believe that they do not meet suitability standards; and
  • a client service continuity plan is in place for clients that purchase individual insurance through a Tier 2 or 3 MGA associated with the Tier 1 MGA, should that Tier 2 or 3 MGA no longer fill that role, and the plan is designed to ensure that such clients continue to receive service from adequately supervised agents under a compliance system that is in accordance with all applicable insurance law.

A Tier 1 MGA must provide reports and share information with the insurer, if requested and if the reports and information are relevant to the insurer’s fulfillment of its obligations to maintain a compliance system under s. 407.10 of the Act. Tier 2 and 3 MGAs have a similar obligation with respect to both the Tier 1 MGA and the insurer.

If an insurer delegates any activities to a Tier 1 MGA, the Tier 1 MGA must implement and maintain a compliance system designed to ensure that it will perform those activities in accordance with its agreement with the insurer (and any instructions the insurer provides) and all applicable insurance law. L&H MGAs cannot delegate any activities relating to their compliance systems. (section 16)

Reporting

The revised Rule includes a new section listing applicable reporting requirements. These include a general requirement, applying to all L&H MGAs, to file an Annual Information Return with the Chief Executive Officer, in a form approved by him or her, on or before March 31 of each year, with regard to the previous year. Other situations in which reports to the Chief Executive Officer are required include (in addition to those referred to elsewhere in this post and those set out in s. 407.4(12) of the Act) where:

• The L&H MGA’s email address, telephone number, fax number or Ontario mailing address change; and
• Any directors, officers or partners (as appropriate) have joined or departed the L&H MGA.

If any of the above occur, the L&H MGA must inform the Chief Executive Officer within five business days. (section 17)

Other Changes and Clarifications

Application

It is now explicitly stated that the Rule applies to prospective agents who employed by or otherwise associated with an L&H MGA. (section 3)

Delegation

The revised Rule makes it clearer that L&H MGAs may delegate responsibilities under any applicable insurance law to another person or entity, while stating that such delegation does not relieve the L&H MGA of any obligation that it has under any applicable insurance law. (section 2)

Designated compliance representative (process to follow if position vacant)

Where a Tier 1 or 2 MGA no longer has a DCR that meets the requirements under the Act and Rule, they must, within 5 business days, notify the Chief Executive Officer and appoint a replacement. If this is not possible, they must appoint a director or officer of the L&H MGA on an interim basis and notify the Chief Executive Officer that they have done so and how they plan to find a permanent replacement. Once that replacement is in place, the Chief Executive Officer must be notified. This provision is new to the revised Rule (section 17)

Eligibility criteria

While the eligibility criteria for L&H MGA licensing have not changed, FSRA has clarified the relevant section in a number of respects, including by inserting references to specific sections of the Act. (section 4)

E&O insurance

Under the revised Rule, L&H MGAs must obtain E&O insurance. In response to stakeholder comments, the option of obtaining a surety bond has been removed. (section 8)

Licence expiry

The rules relating to the expiry date for L&H MGA licences have been simplified so that all such licences expire two years from the date of issue unless a different date is specified on the licence. (section 6)

Suitability criteria

The revised Rule removes the requirement for the FSRA CEO to consider an applicant’s financial position, which aligns the suitability assessment with the existing process for assessing the suitability of corporate agents. (section 5)

Transitional provisions

The transitional provisions of the Rule are largely unchanged from the original Rule. For example, it continues to be the case that an unlicensed L&H MGA will be considered compliant until the Licence Application Deadline (18 months after the Rule takes effect), whether or not it applies for a license. If an unlicensed L&H MGA does apply for a license, the Rule states that it may continue to act as an L&H MGA until the End of Transition Date (24 months after the Rule takes effect) or until the Chief Executive Officer refuses its application for a licence (or the L&H MGA withdraws such application), whichever is earliest. Several other less likely scenarios are also addressed in the transitional provisions. (section 18)

Legislative Amendments and Regulations to be Revoked

FSRA also stated that it intends to request amendments to:

• The Act, to allow Section 18 (Transitional Matters) of the Revised L&H MGA Rule to temporarily override the Act to provide clarity that individuals and businesses may continue to act as L&H MGAs in Ontario provided they comply with the Rule. This approach aligns with the recent introduction of Bill 68, Plan to Protect Ontario Act (Budget Measures), 2025 (No. 2), which added subsection 121.0.1(4.3) to the Act. That subsection provides that, in the event of a conflict between the Act or its regulations and a rule made under subsection (4.2) (which includes the revised Rule), the rule prevails.
• Schedule 1 of Ontario Regulation 408/12: Administrative Penalties, to include reference to requirements outlined in the revised Rule. As a result, an insurer’s or L&H MGA’s non-compliance with or contravention of requirements outlined in the revised Rule would permit FSRA to issue a notice of proposal to impose Administrative Penalties.

Next Steps

Once finalized, the Rule will come into force on the later of:

• The date that Part XIV.1 of the Act comes into force; and
• 15 days after the Rule is approved by the Minister.

As noted above, the comment period for the revised Rule expires on November 19, 2025. Comments may be submitted via the FSRA website.

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