Lessons from TruStar – Strengthening MGA Oversight in Canada

A Case Study in Risk 
 
TruStar is currently embroiled in legal action against its former CEO, Daniel Moses, and other unnamed parties. Accusations include collecting premiums for non-existent policies and redirecting funds for personal gain. A court-appointed receiver, Grant Thornton, has been tasked with resolving the fallout, including addressing uninsured clients and reclaiming potentially misappropriated funds. 

These allegations, though yet unproven, serve as a stark reminder of the possible consequences when governance fails. The case also highlights the complexity of managing MGA operations, particularly in markets where regulatory frameworks vary significantly. 

Broader Implications for MGAs and Insurers 
 
The TruStar case is not an isolated incident. Recent mergers in the broker sector have resulted in the consolidation of MGA portfolios, often creating operational challenges, particularly in premium management. In such cases, fragmented systems can obscure financial irregularities, making it harder to detect and mitigate risks. 

In Ontario, regulators like RIBO and FSRA have intensified their focus on MGA oversight. FSRA’s 2023 review revealed that while MGAs represent a small share of the P&C market, their influence is significant due to the specialized nature of their operations. This raises questions about how effectively insurers are monitoring their MGA partners. 

Pro Global’s Role in Mitigating Risks 
 
At Pro Global, we are uniquely positioned to support MGAs and insurers in navigating these challenges. Our audit and compliance services help stakeholders ensure financial transparency, operational integrity and conformity with contractual agreements. Key areas of focus include: 

• Regulatory Compliance: Helping MGAs and insurers align with evolving regulatory expectations, such as FSRA’s new supervisory framework. 

• Underwriting Procedures and Quality Assurance:  Reviewing existing submit, quote, bind, issue and premium settlement processes to ensure internal procedures are adequately followed and contractual agreements are respected. 

• Premium Settlement Reviews:  Identifying red flags in premium booking and settlement practices, and assessing current premium bordereaux to evaluate accuracy of data capture. 

• Claims Procedures and Quality Assurance:  Reviewing internal claims procedures, reserving and payment practices to assess the adequacy of current claims handling and minimise the potential for customer complaints. 

• Consolidation Risk Management: Addressing challenges arising from mergers, including fragmented premium systems and split operational structures. 

Call to Action for Industry Stakeholders 
 
The fallout from TruStar is a wake-up call for MGAs and insurers across Canada. Strengthening oversight, fostering transparency, and embracing proactive compliance measures are critical to restoring trust and ensuring consumer protection. 

However, it is equally important to recognize the many high-quality, innovative MGAs that are driving progress in the sector. These MGAs play a vital role in improving the efficiency and relevance of insurance, offering specialized solutions that address unique market needs and challenges.  

Pro Global remains committed to helping our partners build resilience in an increasingly complex market. By leveraging our expertise, stakeholders can navigate these challenges and emerge stronger, more accountable, and better prepared for the future. 

Get in touch with our expert audit team to find out more.  

The views expressed in this article are based on publicly available information from regulatory bodies and media reports. The allegations mentioned are unproven and remain subject to ongoing legal proceedings. Pro Global assumes no responsibility for the accuracy or completeness of third-party information cited in this article.