The I accept button on many life insurance Web sites is becoming the electronic signature of choice for some insurers, and a new study indicates the number of users will continue to grow.
Four years after the Electronic Sig-natures in National and Global Commerce Act (ESIGN) was enacted by Congress, the use of electronic signatures in insurance has failed to spread as fast as some pundits predicted it would, but a recent study by LIMRA International shows 50 percent of U.S. life insurers will have some type of e-signature functionality available for customers within the next year.
About 30 percent of companies currently are active in e-signatures, reports Maria Dynia, assistant scientist, technology in marketing and distribution center for LIMRA, with another 20 percent aiming to roll out a solution sometime soon. A lot of the companies start by rolling out pilot programs with products that are simpler in the process, she says. Some carriers are using I accept buttons, others are using a signature pad, and some even offer a voice signature. The LIMRA data shows the most prevalent form of e-signature is the signature pad. If [e-signature] is done using agents, it is likely to involve a signature pad, she says. There is the comfort [for carriers] having agents use technology with their clients.
The report, entitled Electronic Sig-natures in Insurance and Financial Services, blames part of the delay on the
e-signature law itself. Some of the legal risks have held companies back from going into this forcefully, says Dynia. The report states: Regulation and legislation around electronic signatures have been inconsistent. The study mentions the Uniform Electronic Transactions Act (UETA) passed by the National Conference of Commissioners on Uniform State Laws. The UETA and ESIGN differ in several ways, says the study, with ESIGN believed to be stricter in the area of consumer protection.
The LIMRA report lists several benefits carriers can achieve by adopting e-signatures. Five of them are:
Reducing underwriting time.
Maximizing an agents sales time.
Successfully completing straight-through processing.
Recruiting and licensing new agents.
Conducting business-to-business applications such as business with reinsurers.
Studies among agents on the types of technology they have available in the field show there is a great deal of interest in e-signatures on the part of agents, Dynia suggests. An e-signature going along with an electronic application certainly can move the process along quicker, she says. It can process the policy quicker for the applicant. It also can speed up the time it takes for agents to get their commission.
The LIMRA report notes: When reduced to its most common denominator, the primary opportunity financial services companies see for electronic signatures is increased profitability. This comes from expectations in several areas, such as reduced turnaround time, greater customer participation in the decision or application process, and increased consumer loyalty through the transparency required for some transactions.
LIMRA also warns carriers about the risks of e-signatures. These include authentication risk, repudiation risk, and relative risk. Authentication risk involves obtaining an e-signature from someone who later disavows the signature. Repudiation risk is defined as a disagreement over whether the document on which the e-signature appears is not the same one the customer signed. While the two risks mentioned can be found in the paper/wet signature world, as well, relative risk pertains to insurers reviewing their e-signature policies to ensure all the risks are mitigated. Some of the legal risks have been what is holding companies back from going into this forcefully, says Dynia.
The adoption of e-signature technology has been slow, concedes LIMRA, but the consensus among carriers the organization has spoken with is adoption will continue to grow. As the economy continues to show signs of recovery, many expect interest in electronic signatures to increase, the report contends. Dynia adds: Theres a certain amount of caution that is prudent in rolling out technology that can impact the industry significantly. ROBERT REGIS HYLE
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