Thomas, Thomas & Hafer LLP

E-Signatures in the Insurance Industry

HARRISBURG ● ALLENTOWN ● PITTSBURGH ● PHILADELPHIA ● WILKES-BARRE ● MARYLAND ● NEW JERSEY

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Meet Your PresentersThomas, Thomas & Hafer LLP

Pittsburgh, PA Office412-926-1422

jtruitt@tthlaw.com

Jeff TruittAssociate

Pittsburgh, PA Office412-926-1443

jcriswell@tthlaw.com

JeffCriswell

Associate

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What is an E-signature?

An e-signature is much more than just a signature on an electronic pad at the grocery store. In fact, as defined by statute, an electronic signature includes an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.

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Why use E-signatures?

There is, without a doubt, a large initial cost to switching from paper-based signatures to e-signatures. This is an investment in the future.

Over time, e-signatures represent a large cost savings through less postage and less money spent on document management.

Cost

Consumers and adjusters, alike, demand speed more than ever. Speed is not a wish, it is an expectation.

E-signature technology eliminates the need for sending claims document via the mail or by fax. E-signatures can drastically improve the speed of the claims process.

Speed

The use of e-signatures technology can help combat fraud and identity theft.

E-signature technology allows for signers to be uniquely identified and encryption technology ensures that documents cannot be altered without proper authority.

Security

Embracing e-signature technology, will set you apart from the competition.

Consumers have more insurance choices than ever. The cost saving, security, and speed of e-signatures is enough to attract and maintain consumers.

Competitive Advantage

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What laws govern E-signatures?Pennsylvania follows Federal law

ESIGN

• Passed in 2000, the Electronic Signatures in Global and National Commerce Act (ESIGN), represents the controlling federal law on e-signature technology

• Recognizes the legality of e-signatures, electronic delivery, and electronic archival as method for satisfying the requirement to have written signatures and records

• Expressly provides that the e-signature technology applies to the insurance industry

UETA

• Drafted in 1999 by the National Conference of Commissioners on Uniform State Laws, the Uniform Electronic Transactions Act (UETA), aligns federal law with state governance

• Adopted by 47 states, including Pennsylvania

• “If a law requires a record to be in writing, an electronic record satisfies the law.”

PA ETA

• Signed into law by Governor Ridge in 1999, the PA ETA adopted and enacted the provisions of the UETA

• Transactions subject to the PA ETA are also subject to other applicable substantive law

• Includes additions to the UETA to enhance and promote the reliability of electronic commerce

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Best practices for E-Signature Implementation

Research Conceptualization Continuity Implement

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The key to the successful implementation of e-signature technology is planning. Ask yourself these questions:• Why do we want/need to implement e-signature technology?• What do we want? Do we want to use e-signature technology from policy inception to claims to termination?• Who do we want to reach?• How are we going to achieve full-scale implementation?• When do we want to launch?

Partner with experts. E-signature technology involves lots of moving parts that can make implementation seem overwhelming. Without a well thought strategy for implementation, the use of e-signature technology loses its value and can end up costing more than its worth.

Case study: Barwick v. GEICO, 2011 Ark 128 (2011)

Does pressing a computer button constitute a “writing”?

• Arkansas Insurance Code – waiver must be “in writing”

• Online application for auto insurance coverage

• Waiver of minimum medical coverage

Holding: The electronic record memorializing an applicant’s rejection of coverage qualified as a written rejection

Tip: A waiver of statutory rights or opt-out election can be effective and enforceable, when signed online using an electronic signature.

Case study: Prudential v. Dukoff, 674 F.Supp.2d 401 (E.D. New York 2009)

The uncertainty of electronic signatures:1) Who submitted the application?2) When was the application actually submitted?3) Who is the intended party to the contract?4) Was there apparent authority for one party to sign for the other?5) Who can verify that the person providing the electronic signature

is actually the intended applicant?

Case study: Long v. Time Insurance Co., 572 F.Supp.2d 907 (S.D. Ohio 2008)

Online applications completed by another person

• Policy rescinded for false statements• Pre-existing medical condition

Holding: Having signed the application, the individual adopts and ratifies all statements appearing above the signature regardless of whether he specifically provided answers

Tip: By authorizing his/her signature on the application,the insured is responsible for correcting any false answers recorded by another

Case study: Indian Harbor Insurance v. San Diego, 972 F.Supp.2d 634 (S.D. New York 2013)

Where is an insurance policy “issued”?

• Does not matter where the electronic signature was created

Where is the electronic signature affixed to the policy?

• The location of the electronic signature can determine which state’s laws apply if there is no choice of law provision in the contract.

Tip: The need for a record custodian with first-hand with knowledge of the electronic records

Admissibility Requirements

The Records Custodian should be able to testify to these facts:

1) How the electronic signature process worked at the time of the questioned record2) How he/she may conclude that the record is a true and

accurate copy3) The ability to show that the consumer was the person that signed/acknowledged the record

Additional Resources

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• Electronic Signature and Secure Forms in the Insurance Industry: Taking the P&C Pen to the Web by Karen Pauli of TowerGroup

• Guidelines for e-SIGNATURE and e-DELIVERY in the Insurance Business by Gregory T. Casamento and Patrick J. Hatfield of Locke Lord LLP

• Fidelity Insurance Issues related to the Paperless Officer: The Effect of Electronic Signatures on Financial Institutions and other Hot Coverage Issues relating to E-Commerce by Roger Nettie, Scott Spearing, and Alexandra Geiger

• Relevant Federal and State Statutes

E-Signature Vendors*

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• Adobe Systems

• Communication Intelligence Corporation (CIC)

• DocuSign

• Silanis Technology

*This is not an exhaustive list. It is recommended that each individual mutual researches what vendor will work best for their needs.

Electronic Signatures

Thank you!

Jeff Truitt

Jeff CriswellThomas, Thomas & Hafer, LLP