Canada: CASL Is Here – Now What? Practical Issues For Insurers And Brokers

Last Updated: July 9 2014
Article by Bernice Karn

"You are receiving this message either because you have opted in to our email list, you are one of our customers or you work for an organization with which we have a relationship."

As of July 1, 2014, this type of message may become a familiar refrain in the emails you receive. Canada's new anti-spam law (commonly known as "CASL") prohibits the sending of any type of non-exempt "commercial electronic message" ("CEM") unless the recipient has first provided his or her informed, express, opt-in consent or consent can be implied.

Broadly speaking, CASL is a complex piece of legislation which is often ambiguous and contains a multiplicity of exemptions and implied consents that are found throughout the statute and its associated regulations. It also has "teeth", given the severe administrative monetary penalties of up to C$10 million per violation (in the case of corporations and other legal entities), C$1 million per violation (for individuals), vicarious liability of directors and officers, and a private right of action that will come into effect in 2017. Significantly, CASL has extraterritorial application; not only does it apply to messages sent within Canada but it also applies to messages received from senders located outside of Canada.

With CASL's wide reach, what are some practical takeaways for the insurance industry?

1. Messages and Relationships

In the absence of having obtained a CASL-compliant opt-in consent from the intended recipient, insurance industry participants must look at the types of messages that they are sending and the relationships that they have with various groups of recipients to determine whether any of the exceptions or implied consents apply to them.

CASL provides an exemption for "B2B" types of communications (i.e., where CEMs are sent between organizations that have some type of "relationship"). Broadly speaking, to take advantage of this exception, the message must be sent by an employee, representative, contractor or franchisee of an organization, and be relevant to the activities of the recipient organization. We note that this B2B exemption could extend to third-party business partners, such as marketing agencies, recruiting firms, service providers, and financial partners, to name a few. Insurers should be able to rely on the B2B exemption for the communications they send to their brokers.

However, insurance industry participants should be cautious about electronic communications sent to policyholders. Where the policyholder is an organization, again, the B2B exemption would likely apply. However, it is a slightly different situation if the policyholder is an individual. In that case, the insurer or broker would need to rely upon the "existing business relationship" implied consent, which generally expires two years after the policy terminates. That said, any such communication sent to the policyholder on the basis of implied consent must meet the CASL disclosure requirements and include an unsubscribe mechanism.

Maintaining a robust business development program while complying with CASL maybe difficult. Although there is a very limited one-time exception for referral emails, insurers and brokers who are prospecting for business electronically will find it challenging since this is exactly the type of behaviour CASL is designed to prevent. Creative advertising campaigns, incentives, paper-based promotions/contests, mailing, faxing and old fashioned cold calling will become the norm. One-to-one social media solicitations are permissible so long as the disclosure information and unsubscribe mechanism are available on the social media platform interface and the terms of use for the platform require at least implicit consent by users to receive these types of messages.

Requested quotes are a special problem under CASL. In the absence of an outright exemption between the parties based on their relationship (such as the "B2B" exemption discussed above), although the requested quote may be sent, the sender has to ensure that the message contains full CASL disclosure requirements and an unsubscribe mechanism.

2. Updating Forms and Agreements

Much in the same way as privacy consents have become commonplace in applications for insurance and in various types of contracts where the parties are dealing with personal information, CASL will likewise need to be addressed in these documents. It is always preferable to obtain an express, CASL-compliant opt-in consent because that type of consent does not expire (until the individual unsubscribes) and there is no argument about the type of exemption or implied consent that may or may not apply to it. Accordingly, insurance application forms should be revised to request CASL consents. Similarly, we recommend that, where appropriate, general commercial agreements should include a CASL clause between the parties to facilitate the sending of all types of electronic messages between them.

Where insurers are contemplating retaining third parties to communicate with policyholders on their behalf, they should ensure that the agreement governing their relationship includes CASL compliance provisions (including indemnification in case of any CASL violation by the third party), especially since CASL contains specific rules for consents that are sought or messages sent on behalf of third parties.

3. Effective Compliance Policies

Insurers and brokers should adopt a CASL compliance policy that addresses CASL compliance requirements and procedures, record keeping and regular audits of the company's CASL compliance program. Having a CASL compliance policy is an important risk management tool, since it forms part of an effective due diligence defence to violations of CASL, in which guilt is presumed.

The Canadian Radio-television Telecommunications Commission ("CRTC"), the agency responsible for enforcing CASL, recently issued guidance about the contents of a CASL compliance policy. The CRTC recommends that CASL compliance policies address the following elements:

  • Have senior management involvement;
  • Be based on a risk assessment and offer procedures to mitigate the risk;
  • Be reduced to writing and be updated on a regular basis;
  • Be available to all employees;
  • Include provisions for training and employee testing, auditing and compliance monitoring;
  • Address procedures for communications with third parties;
  • Establish record keeping and complaint handling mechanisms;
  • Create disciplinary procedures for non-compliance; and
  • Provide feedback mechanisms.

Record keeping under CASL may prove to be particularly onerous, depending on the complexity of an organization's activities and technological infrastructure. In a typical CASL compliance policy, the CRTC expects the following types of records to be maintained:

  • CEM policies and procedures;
  • All unsubscribe requests and actions;
  • All evidence of express consents (which may include audio recordings or forms);
  • CEM recipient consent logs (presumably for an online opt-in process);
  • CEM message scripts (where obtaining consent orally);
  • Records of actions taken re: CEM unsubscribe requests;
  • Marketing campaign records;
  • Staff training documents;
  • Business procedures related to CASL; and
  • "Official" financial records of the organization.

We suggest that any CASL compliance policy also include a complaint handling mechanism (and possibly identify a CASL compliance officer) since inevitably, individuals will come forward with complaints. Unfortunately, unscrupulous complainants may suggest that they will forego reporting it to the CRTC in exchange for "compensation" – this is where a clearly defined complaint handling protocol will facilitate the internal management of such situations. An effective CASL compliance policy should be coupled with regular training for staff.

4. Conclusion

CASL compliance is not always a straightforward task. It requires a detailed analysis of an organization's business operations, the types and roles of senders, the types of message recipients, the media, and platforms used and message contents. Depending on the situation and the business, in some instances it may be easier to treat various types of electronic messages differently at the front end, if they can be carefully tracked and managed. On the other hand, for some organizations that have many different business units, relationships and types of messaging, it may be easier to default to a single standard for its messaging and/or to rely on only a couple of types of consents, such as an existing business relationship or an express opt-in.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Bernice Karn
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