Ontario brokers to approach regulators on ownership issue

The Insurance Brokers Association of Ontario (IBAO) is planning to ask the Registered Insurance Brokers of Ontario (RIBO) and the Financial Services Commission of Ontario (FSCO) to restrict the ability of non-brokers to buy and control insurance brokerages.
The IBAO changed its membership structure in 2006 to make non-broker-controlled brokerages affiliate or non-voting members. In this spirit, the IBAO plans to ask Ontarios insurance industry regulators to re-visit rules instituted in 2003.
Prior to rule changes in 2003, Ontario did not allow non-broker-owned financial institutions to own in excess of 49% of an insurance brokerage.
Looking back, it is now easier to see [the potential loss of broker] independence more as a symptom rather than a root cause, IBAO president Steven Wagler said in a speech to delegates at the IBAOs annual general meeting in Toronto.
We believe the root cause was the ownership guideline changes that took place in 2003, when we lost the 49% rule, whereby a brokerage could not be owned in excess of 49% by a non-broker entity. We lost this to save sole occupation.
But bringing back some form of a percentage rule will not go far enough, Wagler added. He noted IBAOs board of directors is of the opinion that asking our regulator to implement a percentage ownership test, such as the 49% rule Ontario had in the past, will not adequately address our consumer protection concerns.
Nor will a beefed-up disclosure regime be enough, said Wagler. Although disclosure may reveal a potential conflict of interest, it will not eliminate a potential conflict of interest, he said.
The IBAO will be meeting in a closed session at its AGM to discuss its plans further.