When managing general agencies emerged on the Canadian insurance landscape in the early 1990s, they grew steadily while retaining a relatively low profile, both in the public’s mind and with regulators. And in general, that’s fine with these intermediaries between insurers and advisors, says Paul Brown, the new president of the Toronto-based Canadian Association of Independent Life Brokerage Agencies. But with the recent release of a regulator’s issue paper calling for increased oversight for MGAs, Brown may be facing choppy waters in the coming debate on how the industry should be monitored.

“The No. 1 issue for MGAs is the regulatory environment,” says Brown, who is also president and CEO of Vancouver-based Worldsource Insurance Network Inc. and chairman and CEO of Markham, Ont.-based Worldsource Financial Management Inc. “We support changes in the interests of the consumer, but [the changes] also need to be in the interests of the MGA community.”

The regulatory paper that has raised a ruckus among CAILBA members was issued in February by the Canadian Council of Insurance Regulators, a collection of provincial agencies that regulate the insurance industry. The CCIR’s paper on MGAs — Managing General Agencies Life Insurance Distribution Model — could lead to new regulations, including MGA licensing and advisor supervision.

One of the biggest issues is the supervision of insurance advisors who work through an MGA. Regulators are considering reducing the number of MGAs that an individual advi-sor deals with; the goal of this initiative is to make it easier to keep track of what advisors are doing.

Other proposals could result in a new self-regulatory organization to supervise regulatory compliance by MGAs.

Brown, however, says that the very nature of the MGA sector makes these types of changes inappropriate. “The emergence of an SRO isn’t something that’s required,” he says. “The contract is between an insurer and a client. [MGAs] are an outsourced third party, and [for MGAs] to be totally accountable for advisors is ridiculous.”

If Brown has strong feelings on the matter, that’s partly because of his long history with the MGA sector. He had a pivotal role in helping develop the sector for which he now advocates — he was closely involved with the group of MGAs that initially came together to found CAILBA in 1996.

ENTREPRENEURSHIP

Brown says that he saw the need for a professional association early on: the MGA he founded in 1990, Kelowna, B.C.-based Independent Brokerage Group, joined the National Association of Independent Brokerage Agencies based in Fairfax, Va. Not long after, Brown decided to bring the NAIBA’s practices north of the border. Recalls Brown: “They were a lot further along in the evolution of the [MGA] channel than we were in Canada.”

Brown generally displays a “go for it” take on life. After graduating with a degree in economics from the University of Western Ontario in the late 1960s, he noticed a few of his classmates going into the insurance industry. After learning about the industry, as well as recognizing its growth potential, Brown decided to follow suit.@page_break@He began his career with Manulife Financial Corp. in 1978, as an administrative management trainee. A few years later, he moved into a training and marketing role with Toronto-based Excelsior Life Insurance Co. He then moved to Vancouver and joined American Life Insurance Co., later acquired by New York-based American International Group Inc., and assisted in setting up its brokerage offices in Western Canada.

That last position, and others, involved recruiting MGAs. Within a few years, Brown had decided to go out on his own. “If you are entrepreneurial, this is a fantastic business,” he says. “The industry rewards the effort you put into it, and there is no limit to those rewards.”

After Toronto-based Hub Financial Inc. acquired Independent Brokerage Group in 2000, Brown became Hub’s president and CEO, remaining there until 2004. “The company’s epicentre was in Toronto and I was in Vancouver,” says Brown. “It was a natural progression to move on.”

After helping Halifax-based Barrington Wealth Partners Inc. develop its MGA operations from 2004 to 2006, Brown wanted to move onto a more diversified entity, and decided to join Worldsource.

Brown came back to an executive position at CAILBA recently, after noticing that it was developing a stronger voice that was resonating with MGAs. Indeed, in Brown’s view, CAILBA has already done much to raise professional standards. He says MGAs devote a substantial amount of time to reviewing transactions submitted by advi-sors. MGAs also conduct background checks on the advisors they work with and are developing a compliance “toolbox” for their members, including best practices when setting up contracts between advi-sors and insurers.

But Brown is adamant that it’s ultimately up to insurers to keep a more watchful eye on the advisors. “At larger MGAs, there are standard compliance practices in place,” he says, “such as actively reviewing purchases of seg funds and other insurance products. We can monitor transactions; we can’t monitor advice.”

Standardization is another big issue. “In the past five years, standardizing MGA contracts and technology has been a major priority,” says Brown. “We need to create a level playing field among all MGAs, and CAILBA is the perfect platform for that.”

Brown says that MGAs would welcome licensing. While MGAs must have an insurance licence and at least one direct brokerage contract with a life insurance company in Canada, an MGA does not need to register with a regulator to operate. That should change, Brown says: “We would welcome the potential of an MGA licensing category.”

CAILBA also wants to see more standards in the processing of insurance contracts and the errors and omissions insurance that MGAs hold, which Brown calls a “grey zone.” In general, however, he wants to avoid additional paperwork for MGAs.

Outside of work, Brown describes himself as a “fitness nut” and family man. He spends a lot of time with his three daughters, who are 19, 21 and 26. Two of his daughters play in hockey leagues, and Brown does his best to attend all games. IE