Ontario Regulator Finds Two-Thirds of Sampled Life Agents Skipped Needs and Suitability Assessments, and Warns Insurers That 'Delegation Does Not Mean Abdication'

Ontario's financial services regulator has produced one of the more pointed market-conduct findings on life insurance distribution in recent years. In the first phase of a review of how insurers manage their relationships with managing general agencies, known as MGAs, the Financial Services Regulatory Authority of Ontario, FSRA, found that most of the agents it examined had not completed basic steps designed to protect buyers. The findings were reported by Insurance Business Canada on October 27, 2026. They rest on FSRA's supervisory review and on data provided by the insurers themselves, which the regulator did not independently verify, and FSRA says the work is ongoing.

Who was reviewed

FSRA looked at eight life and health insurers that together hold about 65% of the Ontario market by direct written premiums, so the sample covers most of the market, although it is a small number of companies. It examined 50 life agents working through 10 MGAs and analysed 47 client files. An MGA is an intermediary to which an insurer delegates functions such as recruiting, contracting and supporting agents. Many insurers rely on MGAs to distribute products without building their own sales forces, which is why the relationship between insurer and MGA is a supervisory priority.

What FSRA found about agents

The conduct findings are stark. Some 66% of the agents examined had not completed needs and suitability assessments, the process by which an agent gathers information about a client's circumstances and checks that the recommended product fits. Some 74% had not provided policy illustrations, which show how a product is expected to perform and what it will cost under stated assumptions. And 53% had not provided complete adviser disclosures, the information that tells a client who the agent is, how the agent is paid and what conflicts of interest might exist. These are percentages of a sample of 50, so each agent represents two percentage points, and the sample was not described as random; the numbers should not be read as a statistic for all Ontario agents.

What FSRA found about insurers

The second set of findings concerns oversight. All eight insurers delegated at least some agent recruiting, screening, training or monitoring to MGAs. Only four had documented supervision policies covering all of the MGAs they had contracted. Insurers' own proactive reviews of agents covered between 0% and 4% of their active agents. In other words, the firms that carry the regulatory responsibility were looking at a very small share of the people selling their products.

FSRA also found that every participating insurer worked with at least one MGA using a multi-level marketing model, which rewards agents for recruiting other agents, and that in some cases a large share of an insurer's business came through such an MGA. The regulator noted that its earlier reviews had raised similar concerns about rapid growth and incentives to expand recruiting networks. The concern about multi-level structures is that rewards for recruiting can overshadow the quality of the advice given to customers.

The core message

The article quotes the central message for insurers: delegation does not mean abdication. FSRA is examining the gap between what insurer and MGA agreements require and how they operate in practice. If an agreement requires suitability assessments but nobody checks that they happen, the contract does not protect customers.

The licensing question

The review lands amid uncertainty about how MGAs will be regulated. According to the report, Ontario's planned MGA licensing regime, which had been targeted for June 1, 2026, was paused in February after the industry warned that its definition of an MGA was too broad. A Finance Ministry consultation paper in July proposed amendments to the Insurance Act to narrow the scope. The result is that a licensing framework is still not in force while the regulator is documenting the issues it was meant to address.

Next steps

FSRA said it is expanding its questionnaire to six more insurers, which will broaden the sample. It plans a separate review of recruitment practices, which is where multi-level marketing structures are most relevant, and it will assess the service provided for orphaned life policies. Orphaned policies are typically those whose selling agent is no longer servicing them, and the risks FSRA names include lapses, outdated beneficiaries and weaker claims readiness. A policyholder whose agent has moved on may have nobody to call when circumstances change.

What it means for consumers

Consumers buying life insurance in Ontario can protect themselves by asking for a written needs assessment, a policy illustration and an adviser disclosure document, and by keeping copies. They can ask how the agent is paid and whether the agent works through an MGA. If they feel they were sold an unsuitable product, they can complain to the insurer and, if unsatisfied, escalate to the relevant ombudsman service. The article does not give specific complaint routes, so consumers should check with FSRA for current details.

What it means for insurers and MGAs

Insurers can expect more scrutiny of their supervision frameworks, their sampling of agent files and their treatment of recruiting incentives. Practical steps include documenting supervision policies for every MGA, increasing the share of agents reviewed, testing whether suitability and illustration requirements are followed, and examining whether compensation structures encourage recruitment at the expense of advice quality. MGAs should expect information requests and should be ready to evidence compliance.

Limits of the findings

FSRA's own caveats are important. The data are self-reported by insurers, the reviewed group is small, and this is Phase 1 of a continuing programme. No enforcement outcomes are described in the report. This article summarises a trade-press report of a regulatory publication and is general information, not legal or financial advice.