I was pleased to see an insurer promoting a digital trusts service for protection recently. Having always meant to put my own policies in trust I thought this was a great opportunity to finally do so.
Everything was going well, I filled in the required details online and chose a suitable trust, only to be told to print the form off, sign it, and return it to the insurer by post, which of course I didn’t get around to doing.
Therein lies the problem. As an industry we see ‘digital’ protection services launched frequently, with the purpose of streamlining the journey for advisers and consumers, ensuring more people apply and put policies in force and/or in trust. But until electronic signatures are a genuine part of the process, people will eventually hit a block where a wet signature is required, making the actual process far from digital or streamlined.
Back in 1999 an EU Directive was passed on E-Signatures, from which a UK Electronic Signature Regulation was formed in 2002, when electronic signatures were deemed to be as good as wet signatures, and products were approved as compliant for purposes of offering digital signatures. In a recent Protection Review poll, 71% of protection experts said the use of e-signature technology would have a positive impact on sales.
So what have we been waiting for?
Until much more recently, the British Medical Association (BMA) had not given its approval for the use of e-signatures when accessing medical records as part of the underwriting process for protection. This has been the biggest stumbling block. But it has now been resolved, with the Association of British Insurers (ABI) and BMA announcing in February 2016 their agreement for the use of e-signatures and the principles which must be followed. The lights are green, so we now need the industry to move forward and implement the technology.
To this end, we recently ran a joint briefing event for the protection industry, with e-signature technology provider DocuSign, on how e-signatures can be implemented and the benefits they bring to business. In operation since 2003, DocuSign has 85 million users worldwide, facilitates 950,000 electronically signed transactions each day, with 84% of transactions completed within one day.
E-signatures offer a proper answer to consumer apathy during the sales process. Getting people to sign and send back forms can be a hugely time consuming and costly process, especially when we consider additional time spent chasing, calling, re-sending documents, chasing again, and people changing their mind in the process. Which can all be avoided.
Protection insurance in particular can be a grudge purchase, so mitigating the reasons to drop out of the process before policies go on risk can be a huge benefit.
Global giant Aon adopted the use of e-signatures through DocuSign, and saw a saving of over 200 hours each year in re-keying data, a 20% increase in documents signed, and achieved 100% error free documentation. Similarly, Legal & General America saved $8 per policy after introducing e-signatures, $400,000 in shipping costs and a 50% reduction in its processing cycle.
Finally, the EU has realised that the 1999 Directive hasn’t worked and has launched the new eIDAS regulation instead. This means that, from the 1 July across the EU, you can be confident that electronic signatures will be accepted as standard. If your lawyers used to grumble about new—fangled technology not being legally robust, they have much less reason to now.
E-signature technology can be integrated into existing back office systems without huge time and cost implications. What constitutes an ‘e-signature’ can also come in many different forms to best fit the purpose. They can represent an electronic version of a physical signature, but this is rarely required. More often, an e-signature simply consists of electronic confirmation or acceptance of terms. Speaking at the briefing event, legal consultant Steven Marc Rhodes pinpointed the key compliance considerations as follows:
Base level compliance:
* Looking at your own document requirements and critical points.
* Tailoring your procedures to those requirements.
* Make sure the procedures ensure the signature process matches the requirements.
* Document your procedures.
* Make sure they’re enforced
Base level compliance II:
* Ask your e-signature provider to help you tailor your procedures. Well-embedded prompts and form fields can substantially enhance your level of compliance.
* Talk to your compliance department and get them on board. If they are unwilling to act as witnesses themselves, make sure they identify the right people to act as witnesses. A list of names, and reasons for their suitability, is better than a list of criteria.
* Talk to your legal department and ensure they are well briefed.
* Take external advice as appropriate.
Steven concluded: “E-signatures present an opportunity both for enhanced compliance and for enhanced sales, if the procedures behind them are prepared thoroughly and conscientiously.”
We have the opportunity to make the protection process truly digital. An exciting future could lie ahead if change is embraced for the benefit of everyone.