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E-signature Technology Begins to Catch On (Part 3 of 4)


Last week... you read how the benefit of e-signatures boils down to increased productivity and a better customer experience. This week... read more on the abundance of experience and advice that can inform implementations.

By Ara C. Trembly

Legal Issues?
Is e-signature truly legal at all times? Will it hold up in court? According to Michael Laurie, Vice President and co-founder of Silanis Technology, "It's been 13 years since the U.S. Federal E-SIGN Act was enacted and questions still arise around the legal framework for e-signatures. Simply stated, yes, e-signatures are legal at all times (E-SIGN and UETA make this so), with only a handful of exceptions, one of which is wills."

"With e-signature laws having been in place now for over a decade, there is a body of existing case law referencing examples of e-signatures standing up in court," he continues. In one case where e-signatures were not admitted, he adds, the judge would not admit electronic records into evidence because neither party could demonstrate record and process reliability.

"This is a particularly instructive case because the judge wrote an 100-page opinion on how to ensure the admissibility of electronic evidence - it includes things like not just storing the e-signed record but also the screenshots of the process a signer went through to sign a document," says Laurie. "It brings to light that not all e-signature solutions are the same, and that storing evidence in a reliable manner is something a good e-signature solution should do by default."

Robert McIsaac, a principal at Novarica, a consulting and research firm, adds that, "The advice carriers should heed is not to try and make this up as they go along. Slips in the implementation process can have important and perhaps expensive future consequences. That makes it no different than other technology projects, of course; spending the time up front to do the planning and get the requirements right will pay big long - term dividends and dramatically reduce the potential for drama late in an implementation effort."

Questions may also arise as to the security of cloud-based e-signature solutions, since a failure may result in legal action. According to McIsaac, however, "These solutions are generally extremely secure. Each vendor implementation is unique, of course, and carriers should spend the time to look at the various approaches that solution providers bring to market. The established players have generally 'cut their teeth' in banking and pharmaceuticals, both highly regulated and with significant security concerns. The reality is that insurance is getting to this party somewhat late, which provides for a good and mature ecosystem."

Laurie emphasizes that the security of cloud-based e-signature technology will depend on the practices of the vendor related to security. If a vendor follows best practices, he states, "then the secure e-signature generated on a document can't be stolen, and here's why. The image of an e-signature in an electronic document is nothing more than that, an image. What is important is the security behind the image, and what happens when you click on that image to verify the e-signature. The best practice recommendation and what carriers, agents and brokers should look for in an e-signature solution is that it applies a digital signature for each and every signature block (image) placed in a document."

He adds that the solution should embed the signatures and audit trail into the document and not force the carrier, agent or broker back to a cloud service to verify the authenticity. "It should also offer an easy one-click process for verifying the signature's validity," he explains. "If an e-signature image were to be copied out of an e-signed document and pasted, it should not verify. Plus, any changes made to an e-signed document should visibly invalidate the signature block."

Next week... read why the insurance industry has been relatively slow to adopt e-signature technology.

Ara C. Trembly is the founder of Ara Trembly-The Tech Consultant (, a writing, consulting and advisory practice focusing on technology for the insurance industry. He is also the author of The Rogue Guru Blog (