Ontario’s broker regulator urges caution when outsourcing brokerage records to insurers and third parties

Outsourcing brokerage records to third parties and insurers is on the radar screen of the Ontario brokers’ self-regulating body, the Registered Insurance Brokers of Ontario (RIBO).

RIBO president Jim Hawryluk raised the practice in his president’s address published in the Winter 2011 edition of the RIBO Bulletin.

“The maintenance of brokerage records has become something of an issue in recent months,” Hawryluk wrote. “In particular, we have heard concerns expressed about the outsourcing of brokerage record fulfillment and maintenance to third parties, including insurers.”

Hawryluk urged brokers to be “prudent when outsourcing any business activity.” Under RIBO regulations, a brokerage must have ready access to its records at all times.

If brokers outsource their records to an insurer, they “need to understand how access may be impacted should the brokerage and insurer cease doing business together,” Hawryluk writes. “There may be privacy concerns as well, where personal information of your clients is made available to a third party.”

RIBO recommends that brokers contact their errors and omissions (E&O) providers for guidance.