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e-Signatures and e-Records Blessed but not Elevated
Both ESIGN and UETA state that signatures and records which are required to be “in
writing” may not be denied solely because they are electronic. These bodies of law give legal
legitimacy to Electronic Signatures and Electronic Records, but do not give Electronic
Signatures or Electronic Records any special status. All the other Legal Requirements of
documents to be presented still govern. For example, where an insurance code requires an
application for insurance to contain certain information, the electronic form of that application
must contain that same information.
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Where a law requires a record to be provided or made available in a specified method
that requires verification or confirmation of receipt, both ESIGN and UETA expressly state that
an electronic record may be used, but only if the delivery method provides for such verification
or confirmation of receipt, as required. Where a law requires a record to be signed in the
presence of a notary, an Electronic Signature on an Electronic Record with that same content
must still be notarized, which may be done electronically as well.
Electronic Delivery – Generally
Both ESIGN and UETA recognize that insurers and Producers may satisfy the delivery
Legal Requirements by providing Electronic Records, but the required sequence of steps must
still be met. For example, if an insurance code requires that a certain election be made by the
consumer before the application is completed, the Electronic Record with that election would
need to be made by that consumer before the application is completed. Legal Requirements
specific to records that are “consumer disclosures” (such as those required by an insurance
code) and which must be delivered “in writing” are discussed below.
Unrelated to the Electronic Signature
laws but certainly related to the Legal
Requirements for an Electronic Signature and
electronic delivery process are privacy laws and
data security laws. These laws require that the
electronic transaction processes (taking
applications, delivery of the insurance policy
package, policyholder services transactions and
other transactions involving sensitive information)
be conducted securely, where, for example,
sensitive health information, social security
numbers and other sensitive data be transmitted
through only secure channels.
Electronic Delivery – Special Consumer Disclosures
One of the more difficult aspects in understanding the practical impact of these laws
relates to consumer disclosures. The insurance codes contain a number of Legal Requirements
to provide consumers with disclosures in writing. In life insurance, for example, the Producer or
insurer may be required to provide a replacement notice in writing at the time the application is
taken. In personal lines auto coverage, the Producer or insurer may be required to inform the
consumer in writing of the availability of uninsured / underinsured motorist coverage, and obtain
the consumer’s signature or initials on that disclosure form. In this paper, we refer to this type of
disclosure required by the insurance code to be given to a consumer in writing as a Special
Consumer Disclosure. Of course, where a Special Consumer Disclosure or other type of form is
Both ESIGN and UETA
recognize that insurers and
Producers may satisfy the
delivery Legal Requirements
by providing Electronic
Records, but the required
sequence of steps must still
be met.