How to buy an insurance brokerage in Manitoba: licences, ownership rules and what transfers

In Manitoba, insurance agents are licensed under The Insurance Act, and the Insurance Council of Manitoba is the regulatory body responsible for licensing and disciplining agents, brokers and adjusters. The Council says it obtained its authority by delegation from the Superintendent of Insurance and from the Act and its regulations. This guide covers three things in Manitoba’s Act that a buyer should know: the operating agent named on a corporate licence, the condition of liability insurance, and the way an individual’s licence depends on a contract. For the national picture, see buying an insurance brokerage in Canada.

Who licenses insurance agents in Manitoba

The Insurance Act provides that no person shall act, or offer or undertake to act, as an insurance agent in the province without first obtaining a licence under the Act. The Council describes itself as the regulatory body for licensing and discipline of insurance agents, brokers and adjusters in Manitoba, with its authority obtained by delegation from the Superintendent of Insurance, the Act and its regulations. Its legislation page lists the General Insurance Agents Licensing Rules, which are the rules to read for a general insurance brokerage. The Act itself still speaks of the superintendent issuing licences, so ask the Council how the delegation works for your application.

The operating agent on a corporate licence

Where a licence is issued to a corporation, a partnership, or a person carrying on business under a name other than their own, the Act requires the licence to name an individual as operating agent. That individual must be a director, officer or employee of the corporation, a member of the partnership, or the named person, as the case may be. The Act then provides that no person shall act as an agent under that licence other than the person named as operating agent. If the seller is the operating agent and stops working at closing, the Act lets no one else act as an agent under that licence; ask the Council how a new operating agent is named. Ask who is named now and who would be named afterward.

Conditions on the licence itself

Two further provisions shape what a buyer can do. Every insurance agent licence, and every renewal, is conditional on the agent maintaining a liability insurance policy issued by an insurer licensed under the Act, in the form and on the terms, and for not less than the amount, that the regulations prescribe. Separately, the Act says the superintendent shall not issue a licence to a corporation whose head office is outside Canada, among other listed restrictions. A buyer that is a corporation headquartered abroad should read the full list of restrictions in that section, because it includes other grounds as well.

What the superintendent looks at on an application

Under the Act, an applicant delivers an application in the form the superintendent requires. The application sets out the applicant’s name, address and occupation, the insurers to be represented, the proposed area of operations and other information the superintendent requires, and it must be approved in writing by at least one of the insurers to be represented, subject to exemptions that may be made by regulation. On receiving the application with proof of the required liability policy and the prescribed fee, the superintendent issues a licence if satisfied that the applicant is a suitable person and intends to hold out publicly and carry on business in good faith as an insurance agent. The superintendent may refuse a licence to an applicant who is not, in the superintendent’s opinion, a suitable person. Ask the Council whether your purchase calls for a new application, and if it does, what it will want to see about you.

The Act also lists cases where no licence is issued. One is an application made so the applicant can act as agent or broker wholly or chiefly in insuring property owned by the corporation or its shareholders, members or employees, or by its subsidiaries, parent corporations or associated corporations. Another is an applicant who has not paid in full a fine or costs imposed on it, where the payment deadline has passed on the conditions the section sets out. Ask the seller to confirm that none of these has been an issue for the agency, and run the same check on yourself.

What ends when a contract ends

The Act ties an individual agent’s licence to the agency or employment contract on which it was issued. If that contract is terminated, the principal or employer must immediately notify the superintendent in writing, and the agent’s licence is suspended until another principal or employer has agreed to take the agent on, the agent provides the approval required for reinstatement, and the superintendent approves the reinstatement. The Council’s application steps also say an applicant for an agent or adjuster licence must have valid sponsorship from an agency or adjusting firm, or a sponsoring insurance company. In a sale, ask how each licensed individual’s contract will be dealt with, because the Act suspends the licence when that contract is terminated.

What to ask the seller for

• The agency’s licence, showing its class and the named operating agent.
• The liability insurance policy, to check it against the regulations and the Act’s condition.
• Each licensed individual’s agency or employment contract, and what will happen to it on closing.
• Evidence of the current sponsorship for each individual licence holder.
• Correspondence with the Council or the superintendent, including any condition, complaint or discipline.