Now that President Clinton has ratified a digital signature law that enables consumers to buy insurance, close a mortgage and bind other contracts electronically over the Internet, there's growing sentiment among insurance industry observers that consumers may not be entirely ready or willing to sign on the "digital" line.Although industry analysts believe most carriers will implement the technology supporting e-signatures, it's uncertain how consumers will react. "It takes two to tango," one industry expert says. "If consumers don't jump on the bandwagon, the bandwagon doesn't move."

Clinton signed the law June 30 two weeks after both the House and Senate approved the measure by lopsided margins. Under the law, an electronic contract or record that has an electronic signature is legally bound. The law also stipulates that most electronic contracts and documents will be legally enforceable only if they are capable of being retained and accurately reproduced for later reference.

But one industry analyst does not anticipate a mass conversion to the technology once the law takes effect Oct. 1, 2000.

"I don't think an e-signature law is going to bring about radical adoption of the process," predicts David Potterton, a research analyst with Newton, Mass.-based Meridien Research Inc. "When it comes to online security, consumers are still wary of using a credit card. With an e-signature opportunity, there will be security concerns as well."

Protracted Process

Before it became law, the digital signature legislation passed through a two-year gauntlet of scrutiny by Congress, state officials, consumers groups and businesses.

Because contract law is generally governed on the state level, there was resistance from state governments to endorse a measure that would essentially usurp its powers. The new law, however, incorporates language that upholds a state's authority to oversee rules and obligations of contracts. The law only changes the "medium in which they may be written," the measure states.

The insurance and financial services industries also lobbied to expand the bill's scope to make it germane to their businesses. Originally proposed by the high-tech industry and focused narrowly on electronic contracts, the measure was broadened to allow carriers, for example, to store electronic copies of records, such as insurance policies.

The Independent Insurance Agents of America, Alexandria, Va., lobbied for and were eventually granted liability safeguards stating that agents and brokers can not be held liable for any deficiencies in these procedures as long as they "have not engaged in negligent, reckless or intentional tortuous conduct; were not involved in the development or establishment of the electronic procedures; and did not deviate from such procedures."

Consumer groups fought to protect their constituencies from potential fraud that could result following e-signature passage.

Although the law ultimately provided the necessary protections, there remain logistical issues that could undermine mass acceptance, experts say. For example, consumers, must register a private key devise to enable signature to be received and verified electronically by the carrier, Potterton of Meridien explains.

Sign of the times?

With implementation less than 60 days away, not all carriers have an e-signature blueprint drawn up, and some may not wish to divulge the particulars of their initiatives.

Progressive Insurance Co., Mayfield Village, Ohio, sells auto insurance coverage on the Web, making it a logical candidate to aggressively champion an e-signature technology program. The company, though, either hasn't or wouldn't elaborate on details behind the endeavor, including the additional technology expenses it expects to incur, Toby Alfred, a spokeswoman for Progressive, states.

The company would also not discuss specifics about Web site logistics, such as how or whether its site would have to be modified to accommodate a consumer's digital autograph. One thing is for certain and that is carriers such as Progressive believe that consumers-in keeping with their conservative tendencies thus far when it comes to the Web-may be tentative to fully embrace the concept. "It will take awhile for consumers to get used to this because it's so intangible. How long before mass adoption occurs? I wouldn't even venture a guess. My crystal ball's as fuzzy as everybody else's," Alfred says.

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