Insurers Jump into the e-Signature Ring
Insurance Networking News, August 1, 2009
The road to widespread acceptance for e-signatures among carriers has been a long and rocky one. But, with legal, technological and cultural issues largely resolved, forward-thinking organizations are employing e-signatures to achieve straight-through processing and a competitive advantage. Massachusetts mutual Life Insurance Co., Springfield, Mass., plans to launch e-signature technology early next year as part of its efforts to dramatically improve the customer experience - for both its agents selling policies and its policyholders.
Initially, the carrier will use the technology for new business as part of its straight-through processing (STP) initiative. But it may subsequently roll out the technology for customer service after the policy is issued.
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MassMutual joins a growing wave of insurers that have warmed to e-signatures. "If you truly believe that straight-through processing is all about getting to a paperless electronic submission world, you have to realize you can't do it unless you have an e-signature solution," says Hector Maury, VP of agency operations, U.S. insurance group, MassMutual. "If you try STP without e-signature, it is like having a race car without tires at the start line. You aren't going to get very far. So, without an e-signature solution attached to your STP, I am not sure how you can achieve a true paperless environment and be able to achieve the goals of cycle time and not-in-good-order application submission reductions."
A PROPITIOUS MOMENT
While Prudential, American General Life and Accident Insurance Co. and a few others adopted e-signatures about a decade ago, only in the past year or so has there been a groundswell of interest in the technology from carriers. Not only have insurers recognized its importance to achieving STP, but they have been swayed by the vast improvements in e-signature technology and the competitive pressures by other firms adopting e-signatures. Additionally, with more than 50% of business originating online, carriers want to fully serve customers in their preferred channels.
"I view e-signature as something that insurers, and life insurers, particularly, are finally ready for," says Steven Leigh, principal analyst, industry advisory services, insurance at Gartner Inc., an IT research and advisory company based in Stamford, Conn. "There is enough legal precedent, there is enough acceptance and the vendor maturity is there."
An e-signature-friendly legal precedent was set for insurers last November when a court ruled in favor of Time Insurance Corp. in a lawsuit filed by a policyholder who had allegedly included false information on an application he signed electronically. (For more, see "Scent of Success in Court".) This has helped ease the concerns of players crucial for buy-in. While three to four years ago carriers' corporate law departments and compliance groups were frequently skeptical about e-signatures, "they have gone to school on e-sign [i.e., e-signatures] and they are not the impediments," notes Patrick Hatfield, a partner in Locke Lord Bissell & Liddell LLP, and co-chair of the Atlanta-based law firm's technology transactions group.
REDUCED TRANSACTION TIMES
With e-signature capabilities, insurers hope to greatly reduce their "cycle time," or how long it takes for consumers to get the insurance policy in their hands after purchasing it. Today, this can take from three weeks to 45 days, a time MassMutual wants to cut by two-thirds by using the ApproveIt enterprise platform from Montreal, Quebec-based Silanis Technology Inc., a digital and e-signature solution provider. Such efficiencies can lead to a growth in application submissions, policy placements and, ultimately, the company's participating policyholder base, Maury says.
Amica Life Insurance Co., Lincoln, R.I., slashed transaction times with e-signature technology from Seattle-based vendor DocuSign Inc. that it first implemented in the spring of 2006. For instance, when the carrier issues a policy, it often needs to get other requirements, such as an amendment to the application or a credit card authorization signed. Previously, it completed such a transaction by mail in an average of 14 days. Now, with the e-signature, it completes this in two days. "In terms of getting the coverage in force and getting the case out of our queue, it really sped things up," says Duncan Hannah, assistant VP, Amica.
LOWER COSTS
Carriers are attracted by the ability of e-signatures to improve ease of doing business by reducing not-in-good-order (NIGO) submissions. Some 50% to 75% (as an industry average) of applications submitted to a home office by agents are incorrect or incomplete, notes MassMutual's Maury. This delays the time it takes for a policy to get into a policyholder's hands.
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