The Federal Communication Commissions definition of “existing business relationship” in its do-not-call regulation does not take into account the unique nature of the life insurance business, say two leading life insurance groups.
In joint comments filed with the FCC, the National Association of Insurance and Financial Advisors, Falls Church, Va., and the American Council of Life Insurers, Washington, say that unless the definition is clarified, the regulation could have a dramatic impact on insurers and insurance agents.
The issue concerns the ongoing do-not-call controversy and the requirement that telemarketers check a list maintained by the government of people who do not want to receive telemarketing calls.
The FCCs do-not-call rule, which applies to the insurance industry, contains an exception relating to established business relationships (EBR).
The rule defines an EBR as a prior or existing relationship between a business and a consumer based on the consumers purchase or transaction within 18 months preceding the date of the telephone call.
NAIFA and ACLI say this 18-month cutoff period does not take into account the long-term nature of life insurance products.
“A consumer may purchase an insurance policy or annuity and there may not be any further purchases or transactions between the company and the consumer, or inquiries by the consumer, until a claim is filed several years later,” the groups say.
“Nevertheless,” they say, “the insurance policy or annuity remains in force and a business relationship exists between the parties.”
Similarly, they add, agents often serve as financial advisors to their client, thus extending the agent-client relationship beyond the initial policy placement and renewal.
Agents and companies, the groups say, often call consumers to provide information about enhancements to existing products or new products and services.
“Thus relationships between insurers and policyholders, insureds and annuitants, as well as relationships between licensed insurance professionals and their clients, typically extend for many years and may continue for months or years without an additional purchase, transaction or inquiry by the policyholder,” NAIFA and ACLI say.
They cite paid-up life policies and single-premium policies as examples of where an ongoing business relationship exists even though there may not necessarily be an additional purchase or transaction.
Because of the nature of the life insurance business, NAIFA and ACLI are asking the FCC to clarify the definition of an EBR to say it exists between the consumer and the insurer and the consumer and the agent for as long as there is an insurance policy or annuity in force.
“Such a clarification would ensure that insurers, their representatives and licensed insurance professionals are not unreasonably hampered in their ability to contact persons with whom they maintain relationships in order to make those persons aware of new insurance and annuity products and services that may benefit them,” they say.
In other news, Senate negotiators have reached an agreement on class-action legal reform, which should assure supporters of enough votes to prevent a filibuster.
Although details of the agreement are not yet available, at least 3 Democratic senators, who in October voted against a cloture motion which lost by just 1 vote, now support the compromise.
One of the senators, Sen. Charles Schumer, D-N.Y., says the agreement preserves the ability of Americans to bring lawsuits in a fair and reasonable way while doing away with some of the worst abuses.
“This bill would knock out the egregious practice of forum shopping which allows a local court in a corner of America to make national policy while at the same time protecting the rights of individuals to seek redress in serious cases,” Schumer says.
Jack Dolan, an ACLI spokesman, says life insurers are optimistic Congress will finally pass class-action reform. “While details of the latest pact have yet to be released, we have good reason to believe Congress will address the long overdue need for class-action reform.”
The legislation, S. 1751, would grant federal courts jurisdiction in major class actions in which the plaintiffs are asking for at least $5 million in damages.
However, as originally written, S. 1751 would give federal court judges discretion to send the case back to state court in certain circumstances.
These are if more than one-third but less than two-thirds of the plaintiff class and the primary defendants are from the state where the action was originally filed.
S. 1751 identifies certain factors federal judges should consider before deciding whether to send the case back to state court, including whether the claims involve matters of national or interstate interest and whether the claims will be governed by the state where the suit originally was filed.
According to information from Schumers office, the agreement maintains this one-third, two-thirds formula but slightly modifies the factors judges are to consider when deciding to hear a case or not.
However, specifics on the modifications were not available as of this writing.
On Oct. 22, a cloture motion needed to prevent a filibuster on S. 1751 got 59 of the 60 votes needed to prevail.
Support from Schumer and the 2 other Democrats who signed on to the compromise, Sens. Mary Landrieu, D-La., and Chris Dodd, D-Conn., should provide enough votes to stop a filibuster and allow S. 1751 to receive a final up-or-down vote next year.
Reproduced from National Underwriter Life & Health/Financial Services Edition, December 5, 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.