Friday, December 31, 2010

The Globe and Mail recently published an investigative report entitled "Through Canada’s Insurance Loophole" (Saturday, December 18, 2010)

The Globe and Mail recently published an investigative report entitled "Through Canada’s Insurance Loophole" (Saturday, December 18, 2010), on the role of the Managing General Agency or MGA in the distribution of insurance products.

The
article goes into great detail on the growth of MGAs and the lack of regulation of this distribution channel.

I was made aware of the article in an email from both Advocis’ Chair and President/CEO.


I am posting my response to them on this blog.


“It has been a long time coming but the opportunity to raise the bar is now here. The conflict in the advisor's role as a professional is exacerbated by the ongoing 30 year disconnect between the insurance companies' 'manufacturer', 'wholesaler', 'retailer' distribution model and the Advocis Professional Practitioner model of service to the consumer. The MGA is a 'wholesaler' and the Financial Advisor is a professional practitioner in the current independent channel. The confusion faced by the consumer is "What is it that I am purchasing? A commodity or professional advice or both?" The insurance industry markets commodities. We market solutions (Rx's) premised on a professional diagnosis. If we are advocates for the consumer it is time for us to ensure that the consumer understands that they have a choice - work with a commodity sales channel or work with a professionally designated practitioner. Until we make this distinction clear to the public they will continue to be at risk. We have an opportunity to bring closure to this longtime dichotomy”.

Dan Zwicker

Daniel H. Zwicker, Principal
B.Sc. (Hons.) P.Eng. CFP CLU CH.F.C. CFSB
Certified Financial Planner
Chartered Life Underwriter
Chartered Financial Consultant
Chartered Financial Services Broker
Professional Engineers Ontario

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Daniel H. Zwicker, CFP Blog: http://dzwicker.blogspot.com/

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COMMENT

"HOW AN INDUSTRY OUTGREW ITS REGULATORS"
December 24, 2010

From: "Jim Rogers"
To:
dmullins@cogeco.ca
CC:
danzwicker@rogers.com

Dennis...appreciated--and agree with--your posting earlier today on 'For Advisors Only'.
Here's my letter to the G+M which they published last Monday, following the publication of the first article.
Cheers.
(PS see Dan Zwicker's comments...which I also think are 'spot on'.)

Original Message to Globe & Mail
From: "Jim Rogers"
To:
letters@globeandmail.com
Date: 18 Dec 2010

Subject: "How an Industry Outgrew its Regulators"

Having spent over 40 years as an agent working both directly for a single life insurance company and later as an independent, I concur that the 'lack of accountability' problems cited by Tara Perkins and Grant Robertson are pretty well as they have laid out.The solution is, however, simpler than waiting (hoping?) that improved regulation/legislation will solve the problem. Specifically, product manufacturers (i.e the insurance companies) should be held vicariously liable for the actions of both their MGAs and the agents who put their business through these MGAs.Were this so, the insurers would be far more careful about whom they appoint as an MGA in the first place and, in turn, MGAs would do more due diligence around the agents from whom they will accept business. Layered over these relationships would be minimum required amounts of bonding and E+O coverages--designed to protect the aggrieved policy owners from the financial consequences of proven inappropriate advice on the part of an agent.
Jim Rogers
http://www.rogersgroup.com/

From: The Globe & Mail
Dec. 17, 2019


For the entire article:

http://dzwicker.blogspot.com/2010/12/globe-and-mail-recently-published_24.html