Ratifying the e-signature legislation was an important milestone for the industry. But insurers now must prove the benefits to consumers of using e-signatures to buy insurance online.Now that President Clinton has ratified a digital signature law that makes electronic signatures legally binding, insurers are wondering how they will persuade consumers to use the technology. As the law takes effect, e-signature technology is expected to benefit the insurance industry, but only if consumers are convinced it's better than paper.

A growing number of consumers are now purchasing goods online, but sending an attached legally binding e-signature, along with the information required to buy insurance, presents renewed security concerns. Therefore, carriers that view the Web as a strategic opportunity to sell policies need to convince consumers that online insurance is a fast, convenient and safe way to buy insurance, experts say.

By explaining the benefits of e-signatures, carriers can help consumers overcome their lack of knowledge about the technology. For example, e-signature technology can greatly reduce the time it takes to fill out online applications because the technology electronically stores information, such as names and addresses, that can automatically be entered on forms. In addition, the forms can be filed via the Internet in seconds, rather than days or weeks through conventional mail.

E-signatures provide great promise to the insurance industry, says John Lutkehaus, director in life/health process support for Bloomington, Ill.-based State Farm Insurance Cos. State Farm is looking at how e-signatures will impact its business and how it needs to communicate the technology's benefits to customers.

Security concerns

Insurance executives are hopeful that e-signature technology could help address some consumers' concerns whether the personal information they enter online is secure. "Security is "foremost in our thoughts," Lutkehaus says. "If it's not, people won't be interested."

The American Council of Life Insurers (ACLI) also is concerned with reassuring the public about the safety of online insurance transactions. The Washington, D.C.-based association is developing a program, called Assurance Seal, which is intended to notify online insurance shoppers that they are surfing on a secure Internet site.

The Assurance Seal program is an industry initiative, although the National Association of Insurance Commissioners, Kansas City, Mo., could play a minor role by creating a real-time licensure database, says David Leifer, senior counsel of the ACLI. "We're not advocating new or different rules for the Internet," he says.

For now, the Assurance Seal will be an icon displayed on a company's Web site, that provides validation of a company's authenticity-thereby assuring consumers that the company is legitimate and capable of securing the information exchanged over the Internet.

Companies that earn the ACLI's approval will be responsible for implementing the necessary technology to safeguard customer information, but the ACLI says it will offer insurance companies some assistance. Consumers that have questions about security and e-signatures could click on the seal and be taken to a Web site that explains the basics of e-signatures and online security. n

Matt Brady is a staff writer for Insurance Accounting, a Thomson Financial Media publication based in New York.

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