Best Practices for Global Life and P&C Insurers in Selecting Electronic Signature Solutions Steven Leigh, Juergen Weiss

Electronic signatures are becoming increasingly important for life and property and casualty (P&C) insurers to support their electronic distribution and service channel strategies. In this research, we summarize key considerations for a request for proposal (RFP) that insurers should be aware of.

• Barriers to entry, such as legal concerns, the maturity of technology tools and user adoption issues, are being resolved within insurance, paving the way for more-aggressive adoption of electronic signature technology.
• E-signature technologies and services have to seamlessly integrate with various other applications, including optical archives, electronic forms solutions and workflow systems.
• Insurers have to be aware of a number of pitfalls, such as insufficient user adoption of electronic forms, which will undermine adoption of electronic signature applications.

• Integrate electronic signature technology into electronic applications to create a complete electronic new business process, support Internet self-services and improve agent adoption of electronic applications.
• Ensure that electronic signature vendors can demonstrate their applications' compliance capabilities with all jurisdictions relevant to your rollout.
• Identify use cases that should be supported by electronic signature applications to match different signing environments and target groups.
• Rely on solutions with essential capabilities — such as strong integration with existing electronic forms and workflow systems — and that have enterprise capabilities for use in multiple sales and service channels, as well as solid insurance experience.

As life and P&C insurers in many geographies have continued to build out electronic platforms for new business and customer self-services, such as e-invoicing, they have often neglected electronic signature capabilities within their IT infrastructure because of concerns about complexity and insufficient business case justification. This is now changing, with growing interest from life and P&C insurers for electronic signature solutions for new business, customer self-services, agent or broker onboarding, and internal procedures. This research identifies the issues, functionality and challenges related to selecting electronic signature solutions for life and P&C insurance.

Electronic signature solutions create a workflow process whereby one party can enter into an agreement with another party by indicating their assent for particular written content. In addition, these solutions support authorization and nonrepudiation for critical business processes, such as acceptance of insurance proposals. These technologies can include voice recording devices, signature pad devices, Internet sites with a "click to sign" box or the use of software-based digital certificates, a secure website location, or a host of other technologies. These solutions also have workflow capabilities to guide users through the process as well as the ability to lock written content once it has been electronically signed. Some also have the ability to record and archive the signing ceremony in real time, which can be used later if there is a signature dispute. One of the reasons why such e-signature solutions are becoming increasingly important is the growing compliance requirements in many countries that force insurers to provide a high degree of transparency in their customer-facing business processes. Two examples are the European Broker Directive or the Treating Customers Fairly initiative of the Financial Services Authority (FSA), the U.K. regulator.

E-signature technologies range from point solutions that enable users to add their digitized signatures to the bottom of forms using a signature pad, to enterprise solutions that enable and manage the entire signing ceremony from start to finish. There is also a range of different country-specific regulations that enable the implementation or use of electronic signatures in various jurisdictions — for example, the U.S. Electronic Signatures in Global and National Commerce (ESIGN) Act and the European Directive 1999/93/EC on a community framework for electronic signatures. While point solutions simply enable an electronic form to be signed, enterprise solutions manage the entire signing ceremony, managing multiple signatures, validating identity, archiving the signature event and validating signatures. The wide range of implementation alternatives and vendors providing services in the space creates a broad range of expense scenarios. For example, conversations that Gartner has with insurers and vendors in the U.S. reveal that U.S. insurers could deploy a point solution for less than $50,000 (excluding hardware costs), while an enterprise solution could cost well over $1 million.

From a legal perspective, the courts in North America accept either original ink signature or electronic signature without bias toward one or the other. In many cases, however, the workflow and archiving capabilities of electronic signature tools provide insurers with greater visibility into the signing ceremony, giving them, in some cases, a stronger legal position when going to court. In many countries in Europe, there are advanced electronic signatures required, which strongly implies the use of digital signature certificates. There may be a requirement that these signatures be based on the use of "qualified certificates" or must be executed using secure signature creation devices, such as a smart card and a reader. More on this subject can be found in "The Electronic Signature Solutions That Are Most Effective for Insurers' New Business Processes" and "North American and European Electronic Signature Suite and Service Market."

Before insurers describe the specific business functionality required for electronic signature applications, they should consider a range of fundamental business issues:

1. Fitting into the new business workflow — For the new business processes of life or P&C insurers, electronic signatures are an essential element to create a true straight-through process for the application procedure without creating media conversions or causing unnecessary processing costs. For independent distribution, electronic signatures have been one of the last technologies to be deployed, even though technologies such as electronic applications to support new business workflow have been in production for several years. The delay in deploying electronic signatures for life and P&C insurers' independent distribution channels can be attributed to several factors, including:

• Insurers have been unwilling to take the legal risks and the costs to deploy electronic signatures until recently.
• Insurers have not been forced into accepting electronic signature by Web-based sales and service channels because they have not aggressively pursued these channels for their life and P&C business. Poor agent adoption of electronic applications among independent agents has caused insurers to focus on improving adoption, rather than introducing electronic signatures.
• Life and P&C insurers have often equated electronic signatures with signature pads, creating additional cost and complexity, particularly for independent distribution channels.
• Electronic signature platforms have recently matured further to provide insurers with enterprise-level solutions that can be deployed across the enterprise for multiple signing types, including click to sign, digital signature and biometric signature.

2. Leveraging electronic signature for customer service — For customer self-service, internal processes, such as address changes and agent onboarding, electronic signatures have not been as eagerly pursued by insurers as they have for the new business process. Few companies have shifted their interactions with customers to become more electronic. Based on interactions with insurers and vendors, Gartner estimates that fewer than 15% of North American life insurers have deployed electronic signature capabilities for customer service processes, but this will continue to grow as insurers achieve success with their new business processes.

3. Success is linked to the electronic forms process — The success or failure of electronic signatures for new business is tightly linked to the success or failure of the electronic application. If insurers cannot achieve user adoption with their electronic applications for new business, insurers will also not achieve agent adoption of electronic signatures. This being said, well-designed electronic signature capabilities can help floundering electronic application deployments by providing a more-streamlined and fully electronic new business workflow. "Essential Characteristics of Electronic Application Solutions for Life Insurance" explains the complexity and challenges related to electronic applications for life insurance.

4. Hardware independence is essential — Insurers must also recognize that successful electronic signature processes must be hardware-independent for their direct-to-consumer and independent agent or broker sales distribution channels. To date, agents and brokers that serve multiple insurers have been faced with a hardware dilemma. They have not been able to purchase signature pads, because there is no single pad that works with the electronic application of all the insurers they sell for, and the insurers themselves cannot afford to purchase signature pads for all their independent agents. The best approach then is for insurers to select non-hardware-based alternatives or use software as a service, which is increasingly offered by e-signature providers.

5. Own legal position and multicountry experience — While most providers of electronic signature software have an opinion on electronic signatures, life and P&C insurers should identify their own legal and compliance requirements first. This can become more complicated whenever life and P&C insurers want to establish multicountry platforms that serve different jurisdictions, which is common in Europe or Asia. Once decided, life and P&C insurers can then evaluate vendors as to whether they can satisfy the legal requirements of all the relevant countries, as well as the functional requirements. Insurers should also challenge vendors regarding successful certifications by regulators.

6. Insurance industry experience is key — Many e-signature vendors serve multiple industries. Because insurance has unique use cases and specific compliance requirements, life and P&C insurers should rely on vendors that have experience with insurance deployments, because they will benefit from this industry insight during the implementation.

• When selecting electronic signature solutions, there are several functional characteristics that should be included as part of the RFP evaluation. Some of them are:
• The ability to integrate with a third-party service for identity verification of signers.
• The ability for agents to check a box, indicating that a legal form of ID has been verified.
• Capture key audit data to be stored with the document or the complete capture of the full signing ceremony, which can then be archived, retrieved and replayed as needed.
• Technology should meet local legislation, such as ESIGN and Uniform Electronic Transactions Act (UETA) requirements.
• Lock form content once the signature is completed, and demand a new signature if the content is changed.
• Create comprehensive evidence of integrity and nonrepudiation.
• Ability to re-enter once authenticated:
• Agents should be able to enter and complete signing ceremonies without the customer having to register.
• In this instance, the consumer does not have an account.
• Capture all the key business process steps, including:
• Identity verification
• Identity administration
• Authentication
• Document preparation
• Present/review
• Sign and route
• Store and retrieve
• Audit and validate
• Include additional forms for signature, including supplemental authorizations and disclosures.
• Provide a simple user experience.
• Stop and restart the signature process.
• Ability to have flexibility regarding:
• Business rules regarding validation, notification and exceptions
• Workflow design
• Order and number of signers
• Types and numbers of documents
• Various document activities, including review, signature, delivery or print
• User interface design
• Additional data entry fields
• Archiving capabilities and rules capturing necessary time and date stamps
• Operate in an online and offline mode to best match either the electronic application process, customer demand or agent's selling practice. Insurers should look for solutions that operate in either a connected or disconnected mode, with a single set of code to simplify testing, system maintenance and integration costs.
• Manage and append incomplete signature events and those that happen with multiple signers across time and space.

Electronic signature solutions do not stand alone, but rather depend on a host of applications to authenticate signers, validate login and passwords, manage users, archive signing ceremonies, and create seamless workflows. Below is a description of the possible integration points:

• Agent licensing and appointment integration may be needed to check the validity of the agent/agency for application signing.
• Integration with electronic forms solution is needed, so that the electronic signature workflow is seamless for the user.
• New business workflow will receive the completed application and route it to the correct individual, team or system.
• E-mail may need to send notifications to agents or consumers if there are documents that are ready to review and/or sign. They may use e-mail as a way to authenticate new users as well.
• Integration with workflow will be required, and the boundaries between the application workflow system, and the electronic signature workflow capabilities will need to be rationalized.
• Integration with an optical archiving system to store the signature results for nonrepudiation and legal reasons may be required.
• Integration in portal applications to embed signature functionality in existing user screens and integration with business partner systems to assign personal signatures to user profiles may be needed.
• Reporting contents will enable managers to track cases of pending signatures, monitor throughput and identify follow-up activities.
• Call centers can send out mail or letters to applicants with an e-signature link to digitally sign the necessary paperwork at a later stage.

• User adoption — Because of the complexity of new business and customer service processes, varied signing locations, such as private homes or office environments, and selling styles of agents or brokers, it is difficult to get users to change their behavior and adopt electronic signature processes. The key to success with agent/broker adoption is to ensure that the electronic application technology accommodates all possible use cases. Successful insurers focus first on making the system easy to use and then use positive incentives, such as points or cash bonuses, to encourage its use.
• Coaching users — Agents and brokers that are not accustomed to selling from their laptops will need guidance about how to share their computer screens to click through completed application pages for review and signature. They may need to be presented with recommendations from insurers about how to set up their offices with dual monitors or what equipment to bring to a consumer's home to relate effectively using the technology. Agents also need instructions on how they can ensure that consumers are effectively reviewing the material they are signing and how they should ensure that customer identity is verified.
• No single workflow process — Most insurers have not sufficiently understood the complexity of the environment into which the electronic forms and electronic signatures are being introduced. Workflows for electronic forms are highly varied and depend on a wide range of unique characteristics, including distribution channel, product type, underwriting style, location of sale, connection to the Internet, agent hardware and various process flows.
• Consistent enterprise architecture — Electronic signature technology should fit into the overall technology road map, and as much as possible, a single enterprise solution for electronic signatures should be used. This will give life and P&C insurers the flexibility to expand their electronic signature capabilities across the enterprise as new needs and business requirements arise. Point solutions should only be used when the electronic signature scope is small, and enterprisewide decisions about how to leverage electronic signature capabilities have not yet been determined.
• Understanding the strengths of electronic signature and electronic application and avoiding the use of both solutions interchangeably — While they should be tightly coupled, electronic signature and electronic form technologies are separate systems designed for separate functions. Electronic applications have the ability to collect application information by asking a series of questions and mapping the answers to a paper form. Typically, there is a workflow associated with the completion of the application information governed by business rules. Electronic signature solutions manage only the workflow process related to the collection of all the necessary signatures. Like electronic application functionality, it, too, has rules that govern validation and workflow, but the rules apply only to the signature process. Insurers should be careful not to create or deploy similar functionality in both systems, because they will create redundancy and unnecessary complexity for upgrades or expansion in the future.

• There is an increased interest in non-hardware-based solutions, such as software certificates or click-to-sign alternatives for new business operations. Insurers are increasingly focused on investigating vendor alternatives, including their technology road maps and how electronic signatures will fit into their current technology infrastructures.
• There are a number of e-government initiatives in many countries that will spur the adoption of electronic signatures. In Germany, the third-largest insurance market in Europe, the government will introduce new digital ID cards that contain an ID chip. Citizens will be able to store a qualified digital signature on this chip and can then use it for authentication and nonrepudiation in electronic trade.
• Both life and P&C insurers are putting significant efforts in place to establish multichannel strategies. Electronic signature applications should be able to support different channel needs on a single platform.
• Insurers are becoming increasingly interested in enterprise platforms for electronic signature, instead of point solutions. Selecting electronic signatures typically requires assessing needs from customer service, agent licensing, recruiting and new business to find a solution that could cover all business requirements. Implementation usually begins in one of these areas and then is expanded to include additional business processes.

• Integrate electronic signature technology into electronic applications to create a complete electronic new business process, support Internet self-services and improve agent adoption of electronic applications.
• Ensure that electronic signature vendors can demonstrate their applications' compliance capabilities with all jurisdictions relevant for your rollout.
• Identify use cases that should be supported by electronic signature applications to match different signing environments and target groups.
• Rely on solutions with essential capabilities — such as strong integration with existing electronic forms and workflow systems — and have enterprise capabilities for use in multiple sales and service channels and solid insurance experience.
• Additional research provided by Kimberly Harris-Ferrante, Gregg Kreizman, Stephen Forte and Joanne Galimi.

Ongoing interactions with global insurance company clients and vendors.