The insurance industry is moving towards e-signatures – but concerns over the legality of digitally signed documents may be holding back some brokers, says one industry expert.
“Once carriers and brokers get a sense of what these laws are saying, I think they will realize the obstacles are very few,” says Daniel Fabiano, a partner with Fasken Martineau, “and the advantages in terms of administration as well as to their customers and clients – it just makes a lot of sense to use e-signatures.”
The newness of e-commerce laws, coupled with the slight differences in individual provincial regulations, can make for uncertainty, says Fabiano.
Know more about the e-commerce laws of Canada and how they apply to individuals, businesses, and institutions doing online business or transactions.
“E-commerce – and that includes electronic signature – is governed federally and provincially,” he told Insurance Business. “So while one can appreciate at the outset there might be some reluctance to transition to an e-commerce regime, given this patchwork of laws, I think there are clear advantages to doing this.”
Fabiano will be speaking at the upcoming Insurance-Canada Technology Conference on March 18 on the topic of legal and implementation best practices for e-signatures. As the author of the 2013 CSIO report on electronic signatures, Fabiano will explain the legal requirements applicable to e-signatures, e-records and e-delivery, and provide a legal framework for the design and implementation of a compliant e-sign process.
Although there is e-commerce and insurance legislation to consider, some provinces have made it easier by incorporating e-commerce into their insurance statute, says Fabiano. (continued.)
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“Alberta and B.C. – and hopefully very soon Manitoba – as well as the federal government, e-commerce is built into the insurance laws,” he says. ”Those jurisdictions are ahead of the curve in terms of insuring that the laws are up to date and reflect the realities.”
What brokers need to understand is the legal requirements applicable to e-signatures, e-records and e-delivery, and have in place a legal framework for the design and implementation of a compliant three-sign process, says Fabiano.
The adoption of e-signatures is growing at an astounding 48 per cent a year in the insurance industry. It is the speed and convenience of e-signatures that carriers, MGAs, agents and producers enjoy with straight-through processing of new business applications, disclosure deliver, policy servicing and claims.
For brokers looking to incorporate e-commerce and e-signatures into their business model, it can be broken down into three segments, says Fabiano.
“In terms of moving to an e-commerce platform, it is largely a matter of understanding the e-commerce legislation, that’s the backbone,“ he says. “Second of all, it would be a matter of reflecting the requirements of the e-commerce law into the insurance transaction processes of the particular carrier or broker.
“The third piece is taking e-commerce, plugging it into the requirement of the insurance law; and understanding the few areas of insurance transactions and processes that – still by law – need to be done in traditional paper form. There are very few,” adds Fabiano, “and they vary by province, but they are quite specific.”
In general terms, Fabiano says they would involve certain cancellation notices, and alterations to certain insurance policies. (continued.)
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“In some cases trustee appointments or alterations or revocations,” he says, “and a few others – but quite specific. And unfortunately, it does vary by province. It is unfortunately a matter of jurisdiction by jurisdiction ensuring that the nuances and the peculiarities of that jurisdiction are covered.”
One particularly difficult province to navigate is Quebec, says Fabiano, as that province still uses the Napoleonic Civil Code.
“Quebec is a bit of a challenge – it has a completely different legal system,” he says. “There are a number of obstacles in the Quebec space, where it is unclear in terms of e-signatures and electronic contracting. In many realms, Quebec has its own approach, and does require specific attention. The rest of the provinces are moving the way of B.C. and Alberta.”
Regardless of province, Fabiano does advise a holy trinity of broker principles when using e-signatures.
“There are three principles that brokers should use regardless of which province,” says Fabiano, “Assuming the murkiness of Quebec is resolved in the same manner of the other provinces, these rules can be applied there too.”
Those three principles are: Identity, Intention and Integrity.
“In terms of Identity, you must make sure it is the right person. Is this truly the person signing the document?” says Fabiano. “Intention – did they intend to sign this particular document? And Integrity – is the document that was signed, unchanged?”
