Electronic Signature Technology Takes Hold

If you haven’t seen them yet, chances are you soon will. Electronic signature technology – ‘e-signature’ for short – is rapidly making inroads into a variety of professional services – and the insurance industry is among the leading proponents.

The technology has many benefits both for the insurance industry and for the customers themselves:

Cost savings. E-signatures help control costs. One property and casualty insurer estimates that e-signatures reduce the cost of issuing a new policy by at least $10, and that’s just at the carrier level. Cost and time savings are even more significant when you consider that a customer or agent can use an e-signature on an emailed document much faster and more easily than driving across town to get a signature, or even emailing, printing, signing, scanning, and emailing the document back.

Fewer mistakes. An electronic process has less potential for paperwork errors to delay a policy issuance. This means less risk exposure for the client. It also means much lower administration and compliance costs for the carrier as well.

What are e-signatures? An e-signature is a safe, secure and legally binding digital fingerprint that establishes that you have viewed a document – and affixed your signature to it – except you used bits rather than ink. The signature itself consists of a digital identifier that can be used to verify that your signature came from you.

Are e-signatures secure? Yes, they are as secure as any online or digital procedure – and much more secure than a pen-and-ink signature, which can be forged later on an altered document. An e-signature not only establishes you were there, but also freezes a document in place. The document cannot be altered without removing your signature.

There are three levels to ensuring the security and validity of electronic signatures:

1. User verification. The technology authenticates the user, via a variety of possible techniques:
   Login/password combinations
   Secret questions and answers
   Third party authentication services
   “Smart cards” and PIN number combinations
   SMS codes
2. Document verification. The technology authenticates the document. It takes a snapshot of the document with the signatures in place. The file cannot be altered without your signature being removed. So if your signature is on the document, you know the document has not been altered since you signed it.
3. Process authentication. This is still in its earlier stages of development. But some e-signature vendors also have technology that verifies exactly what information was displayed to the customer, as well.

Legal background. Congress formally recognized the validity of e-signatures under the Electronic Signatures in Global and National Commerce Act (ESIGN). This law first passed in 2000, formally laying out the legal protocols and underpinnings for the validity of the electronic signature in interstate commerce.

Conclusion

The technology has not been universally rolled out yet. Some carriers and agencies are slower to adapt than others. But it is likely that substantially all major carriers and the agencies that represent them will have adopted electronic signature technology over the next few years. You can be sure that the technology is safe and legally sound.

At Cleary, we know how important a comprehensive benefits package can be to your continued success. Give us a call today at 617-723-0700 and we will work with you to create a plan that meets your business objectives, takes into account state and federal laws, and capitalizes on incentives and innovative solutions now being offered.