The legal framework in Canada for adoption of electronic signatures is in place. US best practices point the way to how brokers could provide improved service for clients that prefer digital channels
The lack of e-signature adoption in Canada cannot be blamed on legal or regulatory barriers. In 1999, the Uniform Law Conference of Canada adopted the Uniform Electronic Commerce Act (UECA). Subsequently, laws that include rules for the use of legal and secure e-signatures have been enacted throughout the Canadian provinces, except in Quebec where they enacted their own law, Bill 161, in 2001. In addition, the federal Personal Information Protection and Electronic Document Act (PIPEDA) was enacted in 2000. According to the Office of the Privacy Commissioner of Canada, “the Act seeks to put electronic and paper media on an equal footing.”
With this in mind, the question that begs to be answered is, why aren’t insurance brokers in Canada using e-signature software to win the same benefits as their counterparts in the US? The Canadian Council of Insurance Regulators (CCIR) suggests in its January 2012 report, Electronic Commerce in Insurance Products, that much insurance legislation pre-dates electronic transactions, and the verbiage is simply stalling the movement toward electronic commerce for insurance products.
Others believe the slow progress toward e-signatures is simply due to confusion. Canada has both federal and provincial laws that enable the use of e-signatures. However, as in the US, it has taken some time for Canadian businesses to learn of the legal acceptance of electronic signatures and documents as pronounced by legal experts in this area—such as John D. Gregory, general counsel to the Policy Branch of the Ontario Ministry of the Attorney General, who wrote a position paper about them in 1998—and a growing body of case law. The deployment of electronic signatures by major players in Canada, including RBC Royal Bank, will also spur adoption.
Why & How
The bottom line is that insurance brokers in Canada are missing out on the benefits of e-signatures, even though the laws exist that would facilitate their implementation. According to our clients in the US, having an automated method for remote signature capture helps reduce not-in-good-order rates (NIGO) by up to 75%; improves productivity; delivers drastic reductions in the cost to print, deliver and store paper; and provides the ability to close business in a single web session or face-to-face meeting using a laptop, PC or tablet. Together, all of these factors shorten the time to commission payout.
According to Marcia Berner, director of implementation services for the P&C community with ACORD (Association for Cooperative Operations Research and Development), “Independent agents absolutely need to be able to complete a sale totally electronically. Electronic signatures are essential to this model. Independent agents have to be able to offer online services to their customers to continue to compete.”
To ensure a secure solution, insurance brokers need to implement an electronic signature application that is built on digital signature technology. This combination makes the e-signature legal and compliant by delivering unprecedented visibility into transactions executed, and controlling compliance requirements via automated workflow rules. Digital signature technology also makes the signature secure. To make the e-signature ironclad, there need to be three levels of security included in the solution:
1. User authentication. This is required to reduce fraud and ID theft. Verification can be made through traditional login or password, secret question and answer, SMS code or a third-party authentication service.
2. Document authentication. Proper document authentication ensures that all parties provide irrefutable documents that meet regulations. The solution must include a way to digitally sign and encrypt the e-signed document to produce a tamper-evident seal. Any attempt to make an unauthorized change after the fact marks the document as invalid.
3. Process evidence. The goal of process evidence is to provide peace of mind for members and reduce odds of litigation and fraud. Proper process evidence proves what took place throughout the progression of the workflow. This is accomplished by gathering electronic evidence such as web pages, documents, disclosures or pop-up windows that were displayed; emails or SMS messages sent; any voice or image capture; IP addresses; and the time and date of each event.
SaaS, Signatures & Service
E-signatures are easy to use and an inexpensive technology that needs to be integrated and adopted by insurance companies directly. In a research report authored by Gartner’s Gregg Kreizman, he states, “the ease of implementation of the software as a service [SaaS] delivery model will continue to drive adoption of e-signatures and will establish SaaS as the predominant global e-signature delivery model.” With e-signatures commonly available as an on-demand service, brokers need not take a wait-and-see attitude with insurance companies.
Brokers who don’t provide an e-signature option for clients will be at serious risk of losing business to other channels. Competitive pressure to offer the convenience of e-business is leading many to turn to e-signatures in the cloud. Customers shopping for insurance expect immediate satisfaction. A path that includes e-signatures accelerates the time-to-market and eliminates any delays caused by IT resource constraints because the e-signature service provider takes on the task of provisioning the servers, hardware and software.
Together, Canada’s UECA and PIPEDA establish a framework to obtain legally binding e-signatures. There are no legal obstacles impeding insurance brokers in Canada from gaining the same value and benefits reaped by brokers in the US. The time is now to move forward into the digital age.
Michael Laurie is the vice president of product strategy and co-founder of Silanis Technology, a provider of e-signature technology to major North American banks, insurance companies and the entire US Army. He can be reached at email@example.com.
Copyright 2013 Rogers Publishing Ltd. This article first appeared in the November 2013 edition of Canadian Insurance Top Broker magazine