New ombudservice to handle complaints against MGAs

The Canadian Association of Managing General Agents (CAMGA) has created an ombudservice to act as an adjudicator of queries and allegations made against the association’s members.

CAMGA has partnered with Barb Szychta as the independent MGA ombudservice, the association said in a statement Thursday. Szychta has more than 30 years of insurance industry experience. She has worked in the roles of a broker, insurance and risk management instructor, and vice president of risk management services with Ontario-based MGA Frank Cowan Company (now known as Intact Public Entities following Intact’s 2019 acquisition).

CAMGA members represent more than 90% of all MGAs in Canada, and the ombudservice is specifically designed for the Canadian MGA sector. As a condition of CAMGA membership, members agree to adhere to the association’s code of ethics and code of business operating standards. Inquiries about adherence to any aspects of these codes by CAMGA members will be within the jurisdiction of the ombudservice.

The MGA association unveiled its regulatory regime in November 2021, which took effect on Jan. 1, 2022. The regime is voluntary, but a condition of CAMGA membership.

At a high level, the regulatory undertaking addresses three main pillars:

• A requirement that MGAs carry errors and omissions (E&O) insurance that meets or exceeds the mandated minimum standards in every jurisdiction in which the member carries on business (as applicable to insurance intermediaries)
• Every MGA has an operating trust account for insurance premiums that will be audited by provincial insurance regulators
• At the quote stage, the MGA provides an explicit list and names of carriers and whether they are licensed or not (to provide transparency on the carrier).

Since launching the code, CAMGA has not received any complaints, the association’s executive director, Steve Masnyk, confirmed to Canadian Underwriter. CU asked for hypothetical examples of complaints the ombudservice may receive.

Say the MGA doesn’t have a properly constituted trust account for premiums, Masnyk cited as an example. “Resolution would be that the MGA set up this account within a specific period of time” and prove they have such an account. “If [the] MGA refuses or cannot prove [the existence of an account], then the association would expel them for not being in compliance with the code.”

Another example would be the MGA doesn’t carry E&O insurance. The same process would apply: they would be asked to prove they do, and if not, given a period of time to obtain the coverage. “Again, if they do not comply, then they will be expelled from the association for non-compliance,” Masnyk said.

The ombudservice would respond to complaints “as soon as possible for resolution,” he added. “This service will only deal with complaints against our members, which elevates the transparency and accountability of CAMGA members versus non-members.”

Complaints are being asked to be forwarded to CAMGA as an association through Masnyk, who will then forward them along to Szychta.

“MGAs are fast becoming the foremost underwriters within the commercial and specialty insurance markets, and such a growing footprint requires additional transparency and accountability towards their broker partners as well as their capacity providers,” CAMGA president MaryKate Townsend said in the statement.

 

Feature image by iStock.com/olm26250