Little Concern Over 'Do-Not-Call' Laws

Under the law, which prohibits telemarketers from calling anyone who is registered on the national "do-not-call" list, violators would be subject to a $11,000 fine per violation. The FTC and states begin enforcement of the law in October.

Another reason the industry is not too concerned about the law, say association executives, is because generating sales by cold-calling is not part of a marketing scheme that insurance companies and agents find successful.

"It is not a major issue for us because the property-casualty insurers do little cold-calling," observed Kenneth Stoller, council for the American Insurance Association in Washington, D.C. He said that when the subject has come up in the past, AIA has performed surveys, the results of which are the basis of his observations.

Rick Nelson, a spokesperson for the National Association of Mutual Insurance Companies in Indianapolis, Ind., echoed Mr. Stollers comments, saying that it is not an issue among NAMIC's members.

Julie Gackenbach, vice president of government relations for the National Association of Independent Insurers, based in Des Plaines, Ill., noted that the federal regulations only come into effect when the marketing is done through a third-party telemarketing service. In those cases, it will be up to that service to make sure the law is adhered to.

There is also a question of how the regulations deal with contacts with customers already doing business with an insurer, noted Ms. Gackenbach. The argument goes that there are insurance products that customers should be made aware of, and if the customer's name appears on a "do-not-call" list, there could be a conflict. The regulations appear to be adopting this line of logic, and would not therefore interfere with existing customers, she said.

Another concern is that the Federal Communications Commission is formatting its own set of rules that could cover insurers because the FCC has jurisdiction over anyone using the telephone, noted Ms. Gackenbach. While the NAII is watching the formation of its rules, she pointed out that, when it comes to the "do not call" law, the FTC is the lead regulator, so she expects the FCC rules to closely pattern FTC.

The major purpose of the law is to avoid abusive marketing practices, which, Ms. Gackenbach said, is not something the insurance industry is noted for. She credits the existing state regulatory systems, which offer consumers a place to redress their concerns, for promoting good marketing practices.

However, there still remains some concern that if the course of the developing regulations are not watched, they could cause problems for the insurance industry in ways it never expected.

"Its a very frustrating issue because you have people entering into it who are focused on an immediate, knee-jerk solution to a problem that they understandably, but inappropriately, try to define in a single vernacular," said Patricia A. Borowski, senior vice president of government affairs for the National Association of Professional Insurance Agents in Alexandria, Va. "When you have a specific type of violator in mind, and then attempt to impose [one regulation] on all those who you believe are performing a similar type of business transaction, you are cruising for a legal bruising."

At the local level, independent agent associations feel confident that the new regulations will not impose any added burden on their marketing programs.

"We were only worried that the federal legislation did not pre-empt Indiana law," said Roger Ronk, executive vice president of the Independent Insurance Agents of Indiana, based in Indianapolis, Ind.

Since the insurance industry is not impacted by the "do-not-call" laws because it is not part of the abuse the federal legislation is aimed at preventing, he said agents are comfortable with the legislation. Indiana, he noted, has stricter telemarketing regulations than the federal legislation.

"Agents are not telemarketers," he added. "They only want to communicate with their current clients they are servicing."

"Frankly, as far as agents are concerned, they dont do a lot of cold calling," observed Bill Roof, director of communications for the Independent Insurance Agents of Texas in Austin, Tex.

Especially in a hard market, it is not advantageous to agents to pursue clients they do not know the risk history of, said Mr. Roof. They want qualified leads, usually agency-generated, to avoid presenting bad risks. And because of the nature of the business, the "agent on the street knows his customer."

In New York, Tim Dodge, the director of research for the Independent Insurance Agents Association of New York, based in Syracuse, also said the rules have had no impact on the way agents do business.

Insurers that directly market to consumers also said they do not feel that the new law will affect their marketing.

Both Washington, D.C.-based GEICO and Progressive Casualty Insurance Company, headquartered in Mayfield, Ohio, said they do not do cold-calling. Their contacts are with customers who have expressed an interest in the products the company is offering.

Bloomington, Ill.-based State Farm Mutual Automobile Insurance Company does use some cold-calling in its marketing. Zoe Younker, a spokesperson for the company, said that State Farm plans to follow the desires of customers who sign up on the FCC national "do-not-call" list.

"We obviously respect the wishes of those people who do not want to be contacted, and will abide by their requests," said Ms. Younker. "Most of our contacts are through the agent/company relationship, and that is not something we intend to abuse."

Reproduced from National Underwriter Edition, April 21, 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.