Straight-through processing has become wildly popular with the growth of E-commerce, and many insurers are making the switch to electronic verification. Laws are likewise catching up, and judges across the country are now accepting digital footprints as evidence. Still, the question remains: can E-signatures really be as reliable as written signatures?
Frank Zacherl, Attorney and Partner at Shutts and Bowen, and Michael Laurie, VP of Product Strategy at Silanis, will answer this question in the ACORD LOMA session, “Keeping Out of Court with E-signatures.” The presentation will cover the technical requirements, best practices and preparation required in implementing E-signatures at your own firm.
As the title suggests, “Keeping out of Court” will focus primarily on the ways straight-through processing can help insurers avoid litigation altogether. “This talk is always well-received because I'm talking about something that everybody's terrified of,” Zacherl comments. With so many new and future regulations to keep track of, agents and carriers can hardly afford to add more headaches to the mix. This presentation will explain how E-signatures can actually improve security and customer satisfaction compared to paper. Here's a sneak peak.
Security and Reliability
“The digital footprint doesn't lie,” says Zacherl, an experienced online auto insurer. “Today's electronic technology lends itself very well to proving that something happened.” The actual online signature – a reliable tool in and of itself – is only one part of the equation in well-thought-out verification systems. IP addresses and email accounts are easily traceable, and most servers save masses of data: user histories, authentications and more. It may have been easy to hide activities in the internet's early days, but concealing the digital footprint is now next to impossible for the average consumer.
In fact, Zacherl says that over 90 percent of potential cases are dropped when his clients can point to their customers' specific online activities. He refers to credit card processing as a relevant example. Customer claim fraudulent charges, credit card companies draw up data to remind them of their purchases, and the issues are dropped. Laurie agrees, noting that “in the electronic world, we can layer in multiple types of information to show the person was involved in that process.”
Of course, most potential legal issues have more to do with forgetfulness or negligence than fraud. When paper-based information is lost or unavailable, carriers and customers alike remain frustrated. With electronic signatures, Zacherl notes, “We're not only staying out of court, the customers are more loyal and happy with the process.”
Even if E-signatures do have their flaws, they already seem to be more reliable than paper evidence in and out of court. “Handwriting experts aren't fool-proof, especially if the evidence is old,” Laurie says. As we're seeing all too often in the mortgage industry, it can also be difficult for litigants to even find their original hard copies.
Overall, the risks of E-signatures have more to do with image than technical problems. “I think the risks that do exist in the marketplace are broader,” says Laurie. “Carriers or other parties, including agents, might implement a very poor service, technology or electronic signature.” These mishaps could lead to poor PR for a specific company or technology, but they imply little about the reliability of E-signatures.
E-signatures may be safe and reliable, but are customers willing to use them? Absolutely, say Zacherl and Laurie. Agents are now realizing how much faster they can carry out transactions, providing a far smoother experience for their customers. With the growth of mobile technology, consumers are also finding it far easier to implement E-signatures into their own workflows. “As the end customers themselves are using more and more of that technology to shop for insurance and educate themselves about it, being able to use those devices to carry out those transactions is something they want to do,” says Zacherl.
The legal system was a roadblock at one point, but judges are also coming around. “By and large, if E-signatures are presented to the judge, the judge will accept the evidence,” Zacherl says. Fortunately, court admissibility is rarely even an issue. The number of inquiries versus lawsuits is staggering, and few litigants are making head-on attempts to invalidate e-signatures.
The Way of the Future
E-signatures are here to stay, and they're likely to become more a must-have than a value add. “The systems out there are really better than paper,” Laurie says. “The vast majority of people are usually just blown away by how quickly things get done.” There will always be a segment of the insurance industry that's more comfortable doing business person-to-person and using paper, but that population is dwindling fast. “This is really the way of the future,” Zacherl concludes. “People are going to look at paper signatures the way we look at phone books now.”