Agents, Insurers Applaud Stay of 'Do-Not-Fax' Rule

By Gary Mogel

NU Online News Service, Aug. 20, 2:30 p.m.--Adecision by the Federal Communications Commission to delayenforcement of a rule prohibiting the sending of unsolicited faxesthat may be deemed advertisements was greeted with relief by groupsrepresenting agents and insurers.

The rule, which would have required signed written permissionfrom recipients before such a fax could be sent, had been scheduledto go into effect on August 25, 2003. But it was stayed, untilJanuary 1, 2005, after an uproar by businesses and their tradeassociations, which objected to the intrusion on their ability tosend faxes to clients with which they have an "existing businessrelationship."

The original FCC do-not-fax rule issued in 1992 contained anexception permitting unsolicited advertising faxes to recipientswith which the seller does business on a regular basis.

Patrick Watts, assistant vice president of the Downers Grove,Ill.-based Alliance of American Insurers, noted that the rule wouldhamper insurers from communicating new-coverage and other usefulannouncements to policyholders.

"If a client has a homeowners policy and the insurer wants tofax a suggestion that the client also have a personal umbrellapolicy, that could be deemed an advertisement barred by the rule,"Mr. Watts said.

Mr. Watts also pointed out that every insurer fax with a logo orblurb touting the company's products or services could conceivablybe considered an advertisement and therefore subject to therule.

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

"The FCC has apparently come to its senses on this issue," saidPatricia Borowski, senior vice president of the NationalAssociation of Professional Insurance Agents in Washington, D.C.Ms. Borowski emphasized that the do-not-fax rule conflicts withagents' obligation under insurance law to advise their clients onrisk assessment issues.

"If there is a significant court decision in a state thataffects the need for employment practices liability coverage, andthe agent wants to send a fax about the decision and tell theclient to call if they want a quote for this coverage, the agentcould not do that without a signed permission from the client," sheexplained.

Maria Berthoud, senior vice president of federal governmentaffairs for the Independent Insurance Agents and Brokers of Americain Alexandria, Va., said that the do-not-fax rule is "anunwarranted and unwanted intrusion into business or customerrelationships that have been forged over many years."

"The rules are a government solution to a non-existent problem,"Ms. Berthoud added. "It is a shining example of a federal regulatoroverreaching its mandate." She noted that the rule hinders commerceand economic activity, pointing out that the time and money neededto acquire the signed permissions from thousands of customers inorder to send these types of faxes would be daunting.

IIABA executive vice president and general counsel Debra Perkinsgave an example of how the rule would hurt her association, notingthat "even faxes for an upcoming meeting or business-related coursewould require prior written consent from the recipient." Ms.Perkins added that the penalty for non-compliance could be as muchas $11,000 per recipient.

As the stay is only temporary, businesses and trade associationsmust continue to persuade lawmakers and regulators that the ruleshould not be implemented, the IIABA's Ms. Berthoud noted.

"The stay is only to allow businesses more time to get thewritten authorizations from clients and make additional commentsabout the rule," said PIA's Ms. Borowski."

A battle was won in getting the stay, but the war against thedo-not-fax rule continues, Ms. Borowski stressed.