The Ontario Ministry of Finance (“MOF”) has released a consultation proposing significant amendments to the province’s licensing framework for Life and Health Managing General Agents (“L&H MGAs”). The consultation represents the latest stage in a regulatory initiative that began in 2024, when the Ontario government amended the Insurance Act (Ontario) (the “Act”) to establish a dedicated licensing regime for L&H MGAs in response to consumer protection concerns identified within the life and health insurance distribution channel.
Background
Following the 2024 legislative amendments, the Financial Services Regulatory Authority of Ontario (“FSRA”) undertook two rounds of consultation on proposed rules intended to implement the new framework. The first consultation closed on April 30, 2025, and the second closed on November 19, 2025. Those consultations generated significant industry feedback regarding the breadth of the proposed licensing framework, particularly concerns that the legislation and implementing rules could capture a wider range of entities and activities than originally intended.
In early 2026, FSRA announced that work on the proposed rule was being paused. The framework was scheduled to come into force on June 1, 2026. The announcement noted that the Ontario government would communicate next steps regarding the licensing framework for L&H MGAs. The current consultation gives effect to that commitment.
The Licensing Requirement Narrows
The MOF proposes to significantly narrow the types of contractual arrangements that would trigger L&H MGA licensing. Under the proposed amendments, an entity would only be required to hold an L&H MGA licence where its contractual arrangement:
- is directly with an insurer;
- establishes the entity as an intermediary between the insurer and agents authorized by the insurer; and
- is for the purpose of facilitating the distribution of life or accident and sickness insurance by undertaking, or retaining another party to undertake, key agent oversight activities, namely supervising or monitoring agents and/or screening agents or prospective agents.
The MOF notes that the current wording of section 407.2 of the Act does not require agreements to be directly with insurers, nor does it expressly require the entity to function as an intermediary between insurers and agents. Stakeholders argued that this broad drafting could capture relationships that were never intended to fall within the licensing regime. The proposed amendments are intended to better reflect the industry’s common understanding of an L&H MGA and to distinguish the business of facilitating distribution from the sale of insurance products themselves.
Agent Supervision and Screening Becomes the Key Licensing Trigger
The MOF proposes to narrow the activities that would require an entity to obtain an L&H MGA licence. Rather than the broader list currently set out in section 407.2 of the Act, licensing would be triggered only where an entity performs one or more of the following activities:
- supervising or monitoring the activities of agents;
- screening agents or prospective agents; or
- any additional activities prescribed by future regulation.
Stakeholders expressed concern that the existing list of regulated activities overlaps substantially with functions routinely performed by insurers, agents and other regulated entities, and could unintentionally capture organizations that would not ordinarily be considered MGAs.
Importantly, the MOF does not propose to eliminate regulatory oversight of the activities removed from the licensing trigger. Instead, it proposes to preserve FSRA’s authority to establish standards of practice governing a broader range of distribution-related activities, including the respective roles and responsibilities of insurers, MGAs and agents. This approach is intended to reduce the scope of licensing while maintaining regulatory expectations and accountability for activities that may affect consumer outcomes.
Preserving Regulatory Flexibility
The MOF proposes to amend the legislative framework governing the addition of future licensing triggers. Currently, section 407.2 of the Act authorizes FSRA to prescribe (by rule) additional activities and functions as L&H MGA activities for the purposes of licensing. The MOF proposes instead that any future expansion of the activities requiring an L&H MGA licence be made through regulation. This approach is consistent with the MOF’s broader objective of establishing a more targeted and predictable licensing framework, while preserving regulatory flexibility.
Removal of Sub-MGA Licensing and Increased Reliance on Contractual Oversight
The MOF proposes to eliminate the concept of “sub-managing general agents” from the framework. This simplifies the distribution model contemplated under the 2024 amendments, which had envisaged multiple tiers of MGA relationships, each potentially subject to licensing.
In place of a multi-tier licensing structure, the MOF proposes to place greater reliance on insurers and primary MGAs to manage downstream distribution relationships through contractual arrangements and oversight mechanisms. Responsibility for ensuring compliance with applicable standards would rest primarily with the insurer and the licensed MGA, even where certain functions are delegated to third parties.
Proposed Exemptions
The MOF is also considering targeted exemptions from L&H MGA licensing for certain categories of entities, including:
- licensed insurers (including their officers and employees acting on the insurer’s behalf); and
- L&H MGAs that exclusively facilitate the distribution of group insurance products.
The policy intent of these exemptions is to minimize unnecessary regulatory duplication, while aligning the licensing framework with the evidence and risks of consumer harm identified by FSRA to date. These exemptions would be subject to change as needed. If additional exemptions are needed in future, the MOF proposes that such exemptions be prescribed through regulation.
Standards of Practice Will Become Increasingly Important
One of the more significant policy proposals in the consultation is the MOF’s approach to preserving regulatory oversight despite narrowing the scope of licensing. The consultation recognizes that several activities proposed to be removed as licensing triggers remain important to consumer protection and the effective functioning of the L&H MGA distribution channel.
Currently, FSRA is authorized to establish standards for the performance of the regulated activities in section 407.2 of the Act, as well as the roles and responsibilities of the insurers, L&H MGAs and agents in the performance of these activities. To ensure FSRA remains authorized to regulate activities affecting consumer outcomes in the L&H MGA distribution channel, MOF is proposing to prescribe the following activities which, while not triggering licensing requirements, would be subject to regulation:
- recruiting agents or prospective agents;
- providing training to agents or prospective agents;
- supervising or monitoring prospective agents; and
- any additional activities prescribed by regulation.
The proposal reflects an important policy distinction between licensing and conduct regulation. While fewer activities would require an entity to obtain an MGA licence, a broader range of activities would continue to be governed by regulatory standards establishing how they must be performed and which participant in the distribution chain bears responsibility for them.
Other Issues
The consultation invites comments on whether additional business structures should be eligible to hold an L&H MGA licence. The 2024 amendments provide that only corporations, partnerships and other prescribed entities, can apply for a L&H MGA licence, meaning individuals cannot obtain such a licence. Although the MOF believes its proposed narrowing of section 407.2 of the Act will significantly reduce the scope of persons or entities potentially captured by the licensing regime, it is seeking feedback on whether additional organizational forms should be expressly permitted to apply for a licence.
The Ministry is also requesting broader stakeholder feedback on opportunities to reduce unnecessary regulatory duplication and operational burden associated with implementation of the new framework, while maintaining appropriate consumer protection safeguards. In particular, stakeholders are invited to identify potential implementation risks, unintended consequences and opportunities to improve the legislative framework through amendments to the Act or regulations, rather than through future FSRA rules.
Key Takeaways
The consultation reflects a deliberate recalibration of Ontario’s proposed L&H MGA licensing regime. Rather than broadening the universe of licensed entities, the MOF appears to have accepted much of the industry’s concern regarding regulatory duplication and is proposing a more focused licensing framework centred on entities performing traditional MGA functions.
At the same time, the proposals should not be viewed as a reduction in regulatory expectations. Instead, they suggest a transition from broad licensing obligations toward a framework that relies more heavily on insurer accountability, contractual governance and FSRA standards of practice to achieve consumer protection objectives.
The MOF has requested that stakeholders submit their feedback by August 17, 2026.
