IBAO asks RIBO for a ‘control-in-fact’ ownership test

The Insurance Brokers Association of Ontario (IBAO) is asking the provincial brokers regulator, the Registered Insurance Brokers of Ontario (RIBO), to adopt a control-in-fact test to assess the independence of insurance brokers in Ontario.
Brokers that do not meet the control-in-fact standard should be regulated as agents, said IBAO president-elect Rod Hancock in a speech to IBAO delegates at the associations annual general meeting in Toronto on Oct. 19.
Second, Hancock said, the insurance intermediary market must be regulated by a single independent body, and that RIBO is best suited to that role.
Giving RIBO full jurisdiction over the provinces insurance intermediary market is important, Hancock added, because it is in the consumers best interest that all insurance intermediaries adhere to the same standard of ethics, continuing education and accountability.
Hancock made his remarks in the context of IBAOs ongoing emphasis on broker independence.
This is the big issue facing brokerages today, he said. Recall that in the early 2000s, brokerages had to be owned 51% by brokers. Today, insurance companies can own brokerages or perhaps more accurately can own/control brokerages.
Hancock referred to insurer-owned/controlled brokerages as quasi-brokers. Nevertheless, he said, under conditions in which an insurance company, a party to the insurance contract, owns or controls a broker, I would argue we dont have a broker here but rather an agent.
In such situations, Hancock said, it is important for consumers to understand when they are dealing with brokers (who work with many insurers) and when they are dealing with agents (who work with only one insurer).