Move to more open licensing issuance in Saskatchewan may allow directs, banks to purchase brokerages: IBAS

The Insurance Brokers Association of Saskatchewan (IBAS) is anticipating a meeting with Tim McMillan, the minister responsible for Saskatchewan Government Insurance (SGI), about the government’s proposed plan to allow the province’s motorists to obtain licenses from agencies that do not have contracts with SGI.
Saskatchewan’s policy change is not yet written, and the government opposition is concerned it would allow insurers with agency distribution models, direct writers or banks with insurance operations to issue SGI motor licences.
The government has discussed the possibility of excluding banks from selling plates and licenses. But the independent broker channel in the province is concerned the proposed move would allow bank-owned insurers and direct writers an opportunity to buy brokerages for the purpose of retaining the brokers’ SGI contracts.
“With the proposed legislation it will be possible for these [property and casualty] businesses to purchase a brokerage and retain issuing contract,” observed Heather Pottle, president of IBAS, at the Insurance Brokers Association of Ontario (IBAO)’s 90th annual convention in Niagara Falls on Oct. 20.
“Currently it is a requirement that in order to be able to [be] an issuer, you must also retain an SGI Canada contract. This change will create a fair and open competition in the province, but it will also make it possible for direct writers and banks to purchase a brokerage and retain issuing contract.”
For example, Pottle explained in a follow-up interview, the proposed legislation would allow an insurer represented through an agency channel to buy an independent brokerage’s book of business and to retain the brokerage’s SGI issuing contract, without having an SGI Canada contract in place. The agent would then be able to take the brokerage’s book of business and place it with the agent’s insurer.
“That’s where IBAS’s concern stems from – will bank-owned insurers also be able to do that?” she said.