Who licenses an Ontario life and health insurance agency when it is bought or sold?

Life and health insurance agents in Ontario are licensed under a regulation made under the Insurance Act, not by the regulator of general insurance brokers. The Financial Services Regulatory Authority of Ontario (FSRA) says its role is to ensure agents and businesses that sell life and health insurance comply with Ontario’s laws, including meeting the qualifications and requirements for a licence. The detailed rules are in O. Reg. 347/04 (Agents), made under the Insurance Act. Neither the regulation nor the FSRA page cited here says that a licence passes to a buyer, so this page does not say so either.

Who needs a licence

Section 2 of the regulation says no individual, partnership or corporation shall act as an agent unless licensed under it, subject to the exemptions listed in section 9. That applies even to someone who is an employee, director, officer, shareholder or partner of a licensed agent. FSRA lists separate licence types for corporate agencies and partnerships. A buyer can ask which entity holds the licence, and whether the buyer’s own entity or individuals would need to be licensed.

The sponsoring insurer

Under section 3, a licence application must be accompanied by a sponsoring insurer’s certificate that the applicant is appointed as its agent, and by the insurer’s statement that it has screened the applicant and is satisfied the applicant is suitable. Section 3(2) says that requirement does not apply to a corporation or partnership applying for a life insurance licence, and section 7(2) disapplies it on renewal of a life insurance licence by an applicant who has held one for at least two years. If a sponsoring insurer that certified an appointment terminates it, section 11 requires the agent to notify the Chief Executive Officer and return the licence, but not an agent who has held a life insurance licence for at least two years.

Buying a business and keeping its name

Under section 5, a licence shall not be issued to an applicant that is not a corporation and carries on business alone in a name other than its own. Despite that, a licence may be issued if the applicant has purchased the business and uses the seller’s name together with its own for a period not exceeding three years.

General insurance brokerages are different

Registered Insurance Brokers of Ontario (RIBO) describes itself as Ontario’s regulator of general insurance brokers. RIBO says its members are at liberty to sell their brokerage at any time and to anyone, but the brokerage must stay compliant with the RIB Act, regulations and by-laws, including staying trust positive before and after the sale. For that route, see buying an insurance brokerage in Canada.