State, Federal Regulators Stress Need for Uniform E-Signature Laws.

Insurers will benefit fully from electronic-commerce applications when laws governing electronic signatures are realized, insurance trade association representatives and federal regulators said during a recent insurance legislative meeting.

Currently, no consistent national legal framework governs the use of electronic signatures or electronic records. Forty-eight states have enacted some type of electronic signature laws, but they all differ in scope.

E-signature uniformity ultimately will allow more businesses and individuals to enter into digitally signed contracts without ever having to drive across town or fly to another city, said U.S. Sen. Spencer Abraham, R-Mich., sponsor of a Senate bill that would allow electronic signatures.

The House passed a different measure, and a Conference Committee was created to hammer out the differences.

Spencer spoke at February's Commercial Insurance Legislative Summit in Washington. It was hosted by the Council of Insurance Agents and Brokers, the American Insurance Association and the Reinsurance Association of America.

The benefits of electronic signatures would be great for minimal cost, Abraham added.

"Savings from paperwork alone will be significant," he said. "A lot of companies can also provide discounts to give them an advantage in the marketplace."

Under an online-approval process, customers could log on to an insurer's Web site to modify current policies for new cars or refurbished houses, or to increase the value of life insurance policies.

"Your site tabulates the new cost that they agree to, and they receive their new coverage," Abraham said. "Your company has another satisfied customer."

But insurers need standards in e-signature policy to be able to keep up with the technology.

Efforts to create such a policy have accelerated in recent months.

In addition to the federal legislative action, the National Association of Insurance Commissioners' Electronic Commerce and Regulation Working Group endorsed the Uniform Electronic Transaction Act, a model act adopted by the National Conference of Commissioners on Uniform State Laws, which would allow states to recognize electronic signatures as legal.

"We want to make sure that we are giving the insurance industry the same opportunities to develop e-commerce as anyone else, said NAIC President George Nichols III.

The CIAB favored the Senate's version of electronic authentication legislation, S.761, the Millennium Digital Commerce Act. Federal legislators are trying to pass a bill by year's end, which would act as an interim measure to "provide relief" until states adopt a uniform system.

The Senate bill provides legal recognition of contracts formed using e-signatures and records, but it remains silent toward other records, such as statements, notices and disclosures. It would allow consumers to secure loans online by giving both insurance companies and consumers the legal certainty they need, Abraham said.

The problem with the NAIC's Uniform Electronic Transaction Act is that it will take years for the various states to pass legislation for their constituencies, he said. "It could take four or six years for that to happen," he said.

"The speed at which people are becoming electronically engaged in the commercial world is growing far faster than this law is going to catch