House, Senate Must Craft Compromise E-Signature Law.

The U.S. Senate and the House of Representatives each passed a version of electronic-signature legislation at the end of 1999. There are differences in the two bills, requiring a House-Senate Conference Committee to develop one piece of legislation.

The matter may be taken up again in early spring. Eric Goldberg, senior counsel for the American Insurance Association, said there is concern about a section that addresses consumer-protection issues. The passage requires paper versions of documents "necessary for the public health and safety to consumers." In addition to not allowing businesses to provide these notices electronically, Goldberg said, the consumer can't consent to receiving those notices solely in electronic form.

"Necessary for the public health and safety to consumers" is too broadly worded, Goldberg said. The AIA wants the final bill to specify which notices should be excluded from electronic commerce.

"Also, it really has to clarify that this doesn't apply to business-to-business transactions," Goldberg said. "Businesses are sophisticated enough to know if they want to receive notices electronically."

The bill's intent is to establish a legal foundation for electronic authentication, a signature in electronic form, attached to or logically associated with an electronic record.

Both versions of the legislation allow consumers to consent to electronic authentication and allow consumers to withdraw consent. How often that consent can be withdrawn is a sticking point, Goldberg said.

Both versions call for states to adopt laws consistent with the Uniform Electronic Transaction Act. If they don't, then federal law would prevail. The act has been adopted by the National Conference of Commissioners on Uniform State Code, and the Electronic Commerce and Regulation Working Group of the National Association of Insurance Commissioners endorsed it at the NAIC winter meeting in December. It is model legislation that would allow states to recognize electronic signatures as legal.

California and Pennsylvania both enacted legislation similar to the federal act. Virginia's House of Delegates unanimously passed a similar bill last month. Arizona legislators also are considering an electronic signature proposal.