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In this two-part series, learn more about eSignatures technology, acceptance and implementation. This week, learn how the technology is being sold and how.
by Ara C. Trembly
For the past three or four years, it has been near impossible to attend an insurance technology trade show or conference without seeing an eSignatures vendor and/or a session on eSignature (electronic signature) technology.
According to Webopedia.com, eSignature, sometimes referred to as "digital signature," is a digital code that can be attached to an electronically transmitted message that uniquely identifies the sender. "Like a written signature, the purpose of a digital signature is to guarantee that the individual sending the message really is who he or she claims to be," the source notes. In the insurance realm, of course, eSignature goes beyond mere identification in that it also substitutes for a "wet" signature, which is the normal writing of one's signature on a contract or other documents.
If you're wondering about the legality of such a signature, ECSI, which manages student loans and offers eSignature options, notes on its Web site that The Electronic Signatures Act went into effect on October 1, 2000 and gives electronic contracts the same weight as those executed on paper. Acceptable methods of signing electronically may include simply pressing an "Accept" icon online, use of digital certificates, smart cards and biometrics. Although the act enables documents to be signed electronically, however, it does not require electronic signatures. Thus consumers, and businesses, may or may not choose to adopt this option.
Selling the Technology
As a result, eSignature vendors are working hard to convince insurers, brokers and others that this technology is a must-have. For example, one vendor, eSignSystems, a division of Wave Systems Corp. of Lee, Mass., claimed in its recent marketing messages that its own eSignature product-SmartSAFE-can help insurers concerned with policy administration replacement, business intelligence, claims systems replacement, and agent portals.
If the claims are true, then it is fair to wonder why eSignature, which has been around for many years now, hasn't caught on faster in insurance, an industry that definitely wants more process efficiency and cost savings. According to Matthew Josefowicz, principal in the insurance practice of Novarica, "There is a fair amount of eSignature in things like agent on-boarding, but there hasn't been as much emphasis on it in customer-facing processes."
This is happening "mostly because of the combination of compliance resistance and lack of STP [straight-through-processing] capability," he continues. "eSignatures are most valuable when they speed up a transaction. If an insurer isn't prepared to have a once-and-done interaction with a prospect and turn them into a policyholder in real time, the perceived value of eSignatures is lower. But in cases where eSignatures have been adopted, the efficiencies gained in terms of processing time have been tremendous."
"The potential [for eSignatures] is certainly there, but there are still a significant percentage of agents who are faxing applications or mailing in paper copies, especially for commercial lines," states Mark Breading, partner, SMA Strategy Meets Action. "Many agents do not have any real-time inquiry capability, so options such as eSignatures are lower priority."
Overall, the analysts see a number of barriers to more rapid eSignature adoption in insurance. One challenge is insurers' fear of being non-compliant, says Josefowicz. "Ironically, what hurts eSignature adoption is that the statutes are so well written that there is essentially no case law challenging it. Without case law, compliance officers are hesitant to approve it."
Another challenge, according to Breading, is that to fully capitalize on eSignatures, insurers need to incorporate the capability across the enterprise. "It's not just about capture on the front end. You have to consider security, authentication, authorization, workflow - and consider applications in other areas such as claims," he explains.
Donald Light, senior analyst for Celent, cites two major barriers. "First, the cost of processing 'wet' signatures is a relatively small part of total operational costs-so insurers looking for substantial dollar cost savings will likely look at bigger ticket items. Second, there is inherent resistance to change in field organizations and field sales staff."
Ara C. Trembly is the founder of Ara Trembly-The Tech Consultant (www.aratremblytechnology.com), a writing, consulting and advisory practice focusing on technology for the insurance industry.
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