Agents, Insurers Applaud Stay Of Do-Not-Fax Rule

A decision by the Federal Communications Commission to delay enforcement of a rule prohibiting the sending of unsolicited faxes that may be deemed advertisements was greeted with relief by groups representing agents and insurers.

The rule, which would have required signed written permission from recipients before such a fax could be sent, had been scheduled to go into effect on Aug. 25, 2003. But it was stayed until Jan. 1, 2005, after an uproar by businesses and their trade associations, which objected to the intrusion on their ability to send faxes to clients with whom they have an “existing business relationship.”

The original FCC do-not-fax rule issued in 1992 contained an exception permitting unsolicited advertising faxes to recipients with whom the seller does business on a regular basis.

Patrick Watts, assistant vice president of the Downers Grove, Ill.-based Alliance of American Insurers, notes that the rule would hamper insurers from communicating new coverage and other useful announcements to policyholders.

“If a client has a homeowners policy and the insurer wants to fax a suggestion that the client also have a personal umbrella policy, that could be deemed an advertisement barred by the rule,” Watts says.

Watts also points out that every insurer fax with a logo or blurb touting the companys products or services conceivably could be considered an advertisement and therefore subject to the rule.

Agent groups were also enthusiastic about the stay but cautioned that it is only a temporary fix.

“The FCC apparently has come to its senses on this issue,” says Patricia Borowski, senior vice president of the National Association of Professional Insurance Agents in Washington.

Borowski emphasizes that the do-not-fax rule conflicts with agents obligation under insurance law to advise their clients on risk assessment issues.

“If there is a significant court decision in a state that affects the need for employment practices liability coverage, and the agent wants to send a fax about the decision and tell the client to call if they want a quote for this coverage, the agent could not do that without a signed permission from the client,” she explains.

Maria Berthoud, senior vice president of federal government affairs for the Independent Insurance Agents and Brokers of America in Alexandria, Va., says the do-not-fax rule is “an unwarranted and unwanted intrusion into business or customer relationships that have been forged over many years.

“The rule is a government solution to a nonexistent problem,” Berthoud adds. “It is a shining example of a federal regulator overreaching its mandate.”

She notes that the rule hinders commerce and economic activity, pointing out that the time and money needed to acquire the signed permissions from thousands of customers in order to send these types of faxes would be daunting.

IIABA executive vice president and general counsel Debra Perkins gave an example of how the rule would hurt her association, noting that “even faxes for an upcoming meeting or business-related course would require prior written consent from the recipient.” Perkins adds that the penalty for noncompliance could be as much as $11,000 per recipient.

As the stay is only temporary, businesses and trade associations must continue to persuade lawmakers and regulators that the rule should not be implemented, IIABAs Berthoud notes.

“The stay is only to allow businesses more time to get the written authorizations from clients and make additional comments about the rule,” says PIAs Borowski.

A battle was won in getting the stay, but the war against the do-not-fax rule continues, Borowski adds.

Gary Mogel is an assistant editor of NUs Property & Casualty edition.


Reproduced from National Underwriter Life & Health/Financial Services Edition, August 25, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.