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Electronic signatures: How insurers can use e-sign to stand out

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Insurance apps are proliferating. That's because customers are moving towards mobile, which results in less time spent on PCs. By 2017, the number of users who make mobile payments is expected to rise to 450 million worldwide, according to statista.com.

Shaking Up an Industry

Traditional industries like insurance have historically been a slow-moving dinosaur. But technology, such as electronic signatures, is shaking things up.

Mobile apps and electronic signatures are causing changes in the insurance industry and its legacy systems. It's costly to stick with paper-based forms stored in rows of file cabinets, housed in climate-controlled warehouses.

There are many types of insurance: property, general liability, auto, worker's compensation, homeowner, renter, professional liability, life, and others. Mobile doesn't replace core functions. Insurers still need to comply with complex regulations, manage risk, and protect their customers' interests.

Roadmap for E-Sign Systems

The news media reminds us what can go wrong if important documents aren't handled properly. In 2013, NFL defensive end Elvis Dumervil missed out on a $30 million deal to re-sign with the Denver Broncos. His agent had relied on a slow fax machine that failed to send the signed contract by the deadline.

ACORD, the Association for Cooperative Operations Research and Development, has a set of e-sign guidelines. ACORD's e-signature framework provides protocols on authentication, consent, data capture, disclosure requirements, audit trail, records security, and storage. According to ACORD, "an electronic signature, e-delivery and electronic record archival process should be designed with admissibility legal requirements in mind..."

Compliance Purgatory

Electronic signatures and digital signatures (see definitions for both terms) can help insurance companies improve their processes. By going mobile, they can also gain market share. In 2013, mobile payment transactions grew to over $230 billion worldwide. That figure is expected to more than triple to $721 billion by 2017, according to statista.com.

I worked in Six Sigma for a Fortune 100. Process optimization is a moving target because the external environment (i.e., the marketplace, customer preferences, etc.) is a moving target. Multiple (and ever-changing) variables affect what is an "optimized way" of doing business at any given time.

In traditional industries, you find resistance to change because managers and employees may have too much workload, or are unfamiliar with emerging technologies. Sabotage ensues.

However, managers at insurance companies shouldn't use legacy systems as a reason to resist change initiatives that can improve both their organization and the customer experience.

Employees in this industry work in compliance purgatory. But the source of an insurer's commissions (i.e., customers) is going mobile, and there's an urgent need to compete in this new ecosystem -- or your organization risks being swallowed up in an industry consolidating merger.

Bells and Whistles

In a commoditized business, differentiation can be a huge advantage. In an established industry, executives often replicate what their peers are doing, and as a result, their products look the same.

Margins go down as most players compete on price. Rates are usually the primary factor in a customer's sign-up decision. But mobile features, such as apps and e-sign, can be a value driver by offering potential new streams of revenue.

Examples

Here are a few trend-setting apps that can serve as benchmarks:

(1) ACORD has its own app that "allows users to complete forms on mobile devices, sign forms using the touch screen, save and retrieve forms, and email completed and signed forms," according to Insurance Journal.

(2) Liberty Mutual's Home Gallery App uses a smartphone's camera to let homeowners take inventory of their belongings. By shooting photos of one's possessions (say, before leaving on a vacation), a homeowner can undergo a much easier and more accurate claims process should theft or property damage occur.

With these types of apps, insurers can incorporate digital signature protocols to ensure multimedia files are authenticated, time-stamped, tamper-proof, and legally admissible.

(3) Expensify lets road warriors (such as insurance agents) track expenses, snap pictures of receipts, and create expense reports on their mobile device. "The app also tracks mileage expenses via GPS or odometer entry, and adds time or other billable expenses," according to Insurance Journal.

With electronic signatures, insurance companies can make receipt tracking and expense reimbursement more efficient because these paper-based processes can be digitized.

(4) Each year, there are nearly 11 million car accidents in the United States, according to the U.S. Census Bureau. The Snapsheet app allows drivers and witnesses to capture images of a vehicular accident. It enables drivers and users to upload photos of their damaged vehicles and seek bids from repair shops.

In many cases, the app eliminates the need for insurance companies to send an agent. Snapsheet expects to be doing 300,000 claims a year by the end of 2014, compared to 50,000 claims for 2013.

Mobile as Portable Sensors

Why are smartphones and tablets transforming the insurance industry? Because these devices are portable sensors that record all kinds of human behavior and activities. Ultimately, biometric data recorded by our mobile gadgets will help insurers underwrite risk and reimburse customers for their losses.

Digital signatures capture a customer's consent, time and place of signature, the length of time it took to read a document, and other information that can validate (or invalidate) a contract or policy coverage.

In The Art of War, Sun Tzu says there are two ways of fighting an enemy: the direct or indirect attack. "... there are not more than two methods of attack ... yet these two in combination give rise to an endless series of maneuvers."

Translation for insurance execs: the direct attack (i.e., insurance rates, advertising), and indirect attack (i.e., bells and whistles, mobile features, branding, the cool factor).

Developers are creating all sorts of apps that can improve our lives. Digital signatures can bring insurers into the Mobile Age. And it can confer many of the benefits that digitization offers.

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