The popular dating website PlentyOfFish.com never intended to spam its web users, yet in March 2015, they were fined $48,000 by the CRTC for “sending commercial electronic messages to its registered users with unsubscribe mechanisms that were not in compliance with the law.”
This penalty was the result of an inadvertent breach of Canada’s Anti-Spam Law (CASL), which went into effect on July 1, 2014. While unintentional violations such as the one committed Plenty Of Fish can be costly, one MGA has developed a solution for small businesses to mitigate CASL-related perils.
“On the surface, these rules look extremely onerous - CASL allows the CRTC to levy fines of up to $1 million per individual and $10 million for business,” said Michael McLachlan, President, Trinity Underwriters. “We looked at this and came to the conclusion that its bark is a lot bigger than the bite, and this could be an insurable risk.”
McLachlan explains that one of the biggest threats in the anti-spam arena revolves around overseas hackers who hijack Canadian organizations’ servers and maliciously distribute spam emails. While the CTRC may not levy substantial fines for this particular CASL violation, tangential costs can quickly escalate.
“As long as companies show that they were diligent in trying to prevent this, they will probably not receive fines. They may, however, need to attend hearings, investigate what happened and invest resources in figuring out how to stop it from happening again in the future,” he said.
Trinity Underwriters, as an MGA that’s heavily involved in technological and cyber-related liabilities, felt that these risks “should be insurable.” As a result, it developed a coverage solution to meet heightened broker demand in the small business market.
“We were told by a number of retail brokers that their clients were concerned about CASL. Most commercial clients communicate with customers by email, and they were concerned they might get inadvertently fined. So we launched this about a month ago,” McLachlan said.
So far, feedback has been positive, and McLachlan hopes to continue spreading the word about this important coverage.
“We’ve had a lot of interest and have already reviewed some applications, but the goal right now is to introduce this to the market, get businesses familiar with the product, and continue talking to brokers who are interested in it,” he said.
