The Naegelen Act: new insurance-related obligations
An eventful year 2020
In 2020, more and more insurance professionals suffered administrative sanctions by both the DGCCRF and the ACPR for failing to comply with obligations related to cold calling.
These sanctions are part of a legislative framework that is becoming increasingly restrictive for insurance product distributors.
In particular, law n° 2020-901 of July 24th, 2020 introduced a system to regulate cold calling and combat fraudulent calls following a proposal by MP Christophe Naegelen (“Naegelen Act”).
In view of its purpose, the Naegelen Act had de facto an impact on the insurance sector in general and more specifically on insurance product distributors, who are in the front line given their direct relationship with consumers, particularly via cold calling, the most widespread tool in the commercial field.
In order to gain a better understanding of the application of this law, it seems essential to examine the new obligations imposed on insurance products distributors.
The new obligations
There are five new obligations for insurance product distributors with regard to cold calling:
- Duty to informArticle 2 of Naegelen Act changes the provisions of article L.221-16 of the French Consumer Code since it states that:“Without prejudice to the provisions of Article L.221-12, a professional who contacts a consumer by telephone with a view to concluding a contract for the sale of goods or the provision of a service shall indicate at the beginning of the conversation, in a clear, precise and comprehensible manner, his identity, and if necessary, the identity of the person on whose behalf he is making the call and the commercial nature of the call. The professional shall also indicate to the consumer that he may register free of charge on the list against cold calling provided for in Article L. 223-1 if he does not wish to be the subject of commercial cold calling by this means.”The first part of the first paragraph of Article L.221-16 cannot be considered as a new obligation for insurance professionals since article L.521-1 of the Insurance Code (amended by Order n° 2018-361 of May 16th, 2018 relating to insurance products distribution) already specified that the information communicated by the distributor of insurance products must be “clear, accurate and not misleading”.Nonetheless, the new information obligation imposed on insurance products distributors resides in the second part of the paragraph: they must make it clear to consumers that there is a possibility of registering on an opposition list to telephone solicitation, in this case Bloctel.
- Limitation of contact possibilitiesArticle 3 of Naegelen Act changes the provisions of article L.223-1 of the French Consumer Code especially its second paragraph since it states that:“It is prohibited for a professional, either directly or through a third party acting on his behalf, to solicit by telephone a consumer on this list, except in the case of solicitations in connection with the performance of a current contract and relating to the subject matter of that contract, including the offer to the consumer of products or services which are related or complementary to the subject matter of the current contract or which are likely to improve its performance or quality.”This change is significant since previously, the insurance product distributor had the option of conducting cold calling operations in the event that contractual relationships had only pre-existed.For example, a consumer who had cancelled an insurance contract that had been distributed by an insurance professional could subsequently have been contacted again by the latter for a completely different product.Today, such a situation is no longer permitted in France, since cold calling must take place “as part of the performance of a current contract that is related to the subject matter of the contract”.However, the insurance product distributor is not prevented from cold calling, since it can act within the framework of the contract in a fairly broad manner: call content can take several forms such as amending the contract and its guarantees, taking out additional options, etc.
- Compliance with “Bloctel” fileBesides, article L.223-1 of the French Consumer Code already mentioned enforces each insurance product distributor “to ensure that its commercial prospecting files comply with the cold calling opposition list: 1° At least once a month if it regularly carries out a cold calling activity; 2° Before any cold calling campaign in other cases.”Therefore, a distinction is made by the legislator between those who carry out a cold calling activity “on a regular basis” and those who do not, without specifying the term “regular”, so that an assessment in concreto, adapted to each situation, will have to be made.
- Compliance with the code of good practiceThe Naegelen Act also introduces, under the terms of the provisions of article L.223-1 of the Consumer Code, the following obligation: “the professional mentioned in the fourth paragraph shall comply with a code of good practice which determines the ethical rules applicable to cold calling. This code of good practice, which is made public, is drawn up by professionals operating in the sector of commercial prospecting by telephone. It is, where necessary, specified by decree.”In this regard, the “Comité Consultatif du Secteur Financier” (CCSF) – in other words the Financial Sector Advisory Committee – published a notice dated November 19th, 2019 with the objective of “developing best practices in the context of unsolicited calls to prospects, which allow the obtention of an informed consent and lead to the termination of the sale “in a timely manner” and the generalization of written consent.”Thus, this notice reflects the legislator’s desire for a “code of good practice”, even if the impact of such a code and its binding nature for insurance product distributors can be put into perspective.It may be possible that this code would be detailed more precisely later and that one or more decrees would be issued, in particular to ensure that such a code is complied with as its current non-compliance seems difficult to punish.
- Cold calling slotsFinally, article L.223-1 of the French Consumer Code provides that a “decree, issued after consulting the National Consumer Council, determines the days and times and the frequency at which unsolicited commercial cold calling may take place, when it is authorized pursuant to the second paragraph of this article.”Cold calling for insurance products distributors is therefore limited to certain hours and days without any possible derogation from this rule in order to protect the consumer.Up to now, since the decree has not been published, nor has the opinion of the National Consumer Council, it is impossible to provide further details on this aspect.
As to the new sanctions introduced by this Naegelen Act, their description will be the subject of an additional article that will be published soon.