Our Wired World

The Virtual Dotted Line

Why Insurance Companies Need Electronic Signatures and Document Management

by Jesse Wood

Jesse Wood is the CEO of document management software vendor, eFileCabinet. Founded in 2001, eFileCabinet, Inc. began as a cutting-edge tool to digitally store records in accounting firms. As it grew in popularity, eFileCabinet developed into a full-fledged electronic document management solution designed to help organizations automate redundant processes, ensure security, and solve common office problems. Visit here.

If you want to know why insurance companies need electronic signatures and document management, you must first look at the regulatory landscape impacting the modern insurance industry climate.

In the past 10 years, this climate has changed considerably, and most insurance companies are struggling to do one of two things to handle these changes: 1) make internal policies to comply with these changes without sacrificing profitability and 2) Find creative ways to outpace competitors looking for the same solutions to these problems.

Neither is an easy feat.

Delivering Solutions In Connected World

The National Association of Insurance Commissioners (NAIC), which was created and is still governed by the chief insurance regulators from all 50 US states, not including the District of Columbia and 5 total US territories, has even devoted a large portion of its industry report to addressing one of the myriad ways insurance companies are striving to transcend regulatory difficulties—through the efficiency of the internet.

This, among less important reasons, is why insurance companies need electronic signatures and document management. Used separately, they are ineffective at delivering the solutions insurance companies need.

Together, their interplay makes navigating regulatory changes easy, especially those administered and upheld by the Federal Insurance Office (FIO) and National Association of Insurance Commissioners (NAIC).

Aside from the efficiency these electronic signature tools provide in confluence with document management technologies, they also address the regulatory concerns of the Federal Insurance Office (FIO), and NAIC.

And for the following reasons.

Understanding E-Commerce and Insurance Sales Problems

Most states in the U.S. require those applying for insurance services over the internet to engage in the completion of an electronic signature, whether it is used as a standalone technology or integrates with document management technologies.

If this process didn’t take place, the sale would not be legitimized or documentable, and could raise problems for the agent and the company he or she works for should any legal disputes arise.

Additionally, the bulk of state laws insist on finding ways to remove the possibility of misrepresentation or fraud on the client side of the transaction. Essentially, without the right tools in place to safeguard transactions, an e-sale in the insurance industry isn’t legitimate.

Although this may seem like commonsense, it leaves out a notary or witness as a common intermediary, something insurers didn’t have to worry about before the 21st century.
Therefore, although the internet is an immensely helpful medium, its advent brings into question the legitimacy of an electronic signature collected by insurance agents or the companies for which they work.

Despite digital signatures being more efficient (after all, if e-signatures existed in 1776, all 56 U.S. delegates could’ve signed the document on the day our nation was founded. Instead, it took roughly a month to collect all the signatures), they require additional authentications, which can be automated by document management tools.

Legitimizing Electronic Insurance Applications with Document Management Technology
ACORD, the Association for Cooperative Operations Research and Development, is a non-profit organization giving data standards to the insurance industry to uphold.

This organization took it upon themselves to assimilate the internet into modern insurance transactions, concomitantly albeit indirectly suggesting that insurance companies need electronic signatures and document management to bring the industry into the era of cloud-computing and digital hosting. If the insurance industry is not yet at this stage, it will be within the next decade.

The way ACORD achieved this is by making forms available on their domain. In result, many organizations and insurance applicants are using these forms for their own digital transactions.
The only missing step in this process is the application of electronic signature technology situated in document management solutions to the final stages of the process.

This would enable insurance agents and purchasers of their policies to keep the entire insurance process digital, scaling back on paper and time-wasting processes alike.

Why Insurance Companies Need Electronic Signatures and Document Management More than Anything Else

Above all else, these are the features that create an effective interplay between document management technologies and electronic signatures.

Authentication Procedures
Inclusion of a KBA challenge question helps authenticate the digital signature process. This ensures that the party attempting to sign a document is who he or she says she is.

IP Address Verification
Like most electronic processes, and another reason why insurance companies need electronic signatures and document management, this IP address verification, which is a baseline standard for digital signature applications in most doc management solutions, is an extra layer of verification that can bolster the legitimacy of a signed document if a legal dispute over its authenticity ever arises.

Form Fill Automation
Additionally, speaking of insurance forms, there are new and exciting ways for agency producers in the insurance industry to automate the form fill process for recurring client-based and document related processes. Zonal OCR makes this possible, eliminating manual processes and reducing document workload to a bare minimum.

Bar Code Authentication
Although a bar code authentication in an electronic signature should never be a standalone backup for security, it does add an additional layer of legitimacy to the security process. Although seemingly opaque and not very different from the rest, a barcode is a highly unique stamp of individuality that reveals its purpose and origins quite clearly.

To speak analogously, a barcode is to a document what DNA is to a human being. If we didn’t have DNA (deoxyribonucleic acid) to verify criminal actions, there would be a lot of criminals on the loose. And if we didn’t have barcode authentication for digital signatures, we would have a lot of forged documents on our hands.

A Final Note on Why Insurance Companies Need Electronic Signatures and Document Management: Ensuring Data in Documents is Unaltered

In verifying the authenticity of an electronic signature, and revealing why insurance companies need electronic signatures and document management, it becomes obvious that electronic signatures are more useful if applied through document management technologies, as these technologies ensure documentation is not altered, therein affecting the locution of any specified contract.

What’s more, the role-based user permissions of a document management system can trace who changed what within a system, ensuring those who alter data without authorization can be held accountable for their actions.