Vital “Signs” – The Importance of E-Signatures in the Life Insurance Transformation Process

Summary –Insurers looking to strengthen their customer experience by integrating technology must bring an electronic signature solution to their processes – and there’s no good reason not to!

The e-signature is a critical part of digital transformation across many industries. Real estate transactions, legal documents, and most forms of commerce are using electronic signature solutions to increase service offerings and improve turnaround times.  

So why are so many life insurers still rejecting the trend?

The traditional insurance model put a great deal of emphasis on the importance of an in-person wet signature. It was essentially a guarantee that the applicant was who he or she claimed to be, and that the documents were accurately completed. Even though there has always been the possibility of fraud or misrepresentation by an applicant, traditional carriers felt comfortable watching someone sign their life insurance documents, backed by proof of identity.  

The trade-off has always been speed.  

To complete an insurance transaction, the customer either had to meet face-to-face with the agent and sign the documents physically or print out documents sent to them electronically, sign them, and return them for processing.  But both options take time — something that many in the market for insurance (and just about every other product and service available) don’t feel they have now. There is an expectation, thanks to companies like Amazon and Zappos, and thanks to platforms that can link anyone anytime, like Zoom, that any business transaction should be able to happen wherever the customer is, at whatever time the customer wishes to interact.  

The truth is that more and more carriers are finding their way into technology. They are often reaching out to insurtech companies like Sureify because they are ready to embrace modernization. That’s good news for an industry that’s been slow to adapt in the changing world! They know that they need to re-invent themselves by finding ways to streamline processes and meet customer needs for an optimized, hassle-free experience. They also know they need to be flexible and ready to change to stay viable and financially healthy.  

The importance of e-sign capability has become even more critical with the advent of accelerated underwriting. An e-signature process, coupled with any life insurance buying experience — even a face-to-face agent interaction — can lead to a real-time decision for the customer. That’s a great benefit for younger, healthier customers who are most likely to qualify for a no-medical decision. Using e-signature can drastically improve placement rates. 

Many traditional companies are already on board with, or will soon launch, the powerful combination of e-signature and accelerated decision. Groundbreakers include The Principal, Penn Mutual and Vantis Life.  Non-traditional distributors like Haven, Ethos and Fabric have been there for several years, applying even more pressure on traditional life insurers to implement e-signature technology. 

The ability to affirm participation, agreement and consent (among other things) through a method other than a wet signature is a crucial element for any company truly wanting to modernize. The e-signature speeds the issue of a policy, the formation of a decision and, when used for servicing the policy, adds to customer satisfaction, loyalty and persistency, all keys to long term profitability.

In addition to happy customers, who now expect to do business on an app from start to finish, insurers with e-sign capability will have happy agents.  After all, the technology will likely get commissions paid faster!

What’s more, the e-signature provides as much identifiable security and protection as the wet signature offers. They have to, since they are now regulated by the federal government.

The US Federal ESIGN Act of 2000 defines an e-signature as an “electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.” This definition is important for a few reasons. First, it is defined by the federal act, which should immediately put at ease nervous life insurance compliance officers. Second, it is important to note that an e-signature can be a “voice” signature (as defined by “electronic sound”) or a “symbol” like a checkmark of a previously selected signature ”proxy.”

So why the pushback? Let’s take a look at the most commonly cited reasons. 

Security concerns. We are living in times where technology exists in unprecedented realms.  It can make life easier in a way that was unimaginable only 15 years ago! The downside is that it can put at risk an incredible amount of personal information. Breaches have damaged or killed numerous companies – and no insurer wants to be next on that list.

Luckily, the companies that offer e-signature services for industries reliant on the security of information (and insurance fits into that group) have far exceeded expectations. DocuSign and Adobe Sign, two of the leaders in the new landscape, have built into their processes the ability to verify an identity not just on a single identifier, but on a much more complete digital picture – IP address, password, voice recognition, etc. The advent of “two-factor authentication,” which is now almost a requirement for financial transactions, adds an additional layer of peace of mind for life insurance compliance managers.

Potential fraud.  The possibility for fraud has always been there, and, to many of us, e-signature fraud seems to be a more concrete threat — especially since we may know people who have been taken advantage of. In environments that rely largely on an agent sales force, this argument seems especially forceful. “If my agent can obtain a signature while sitting with a client, why should I jump through hoops to offer e-signature capability?”  As mentioned earlier, the answer is less time and better service for the customer. Additionally, agents may engage with underinsured middle market clients when they can do so in a way that doesn’t require an inordinate amount of time and effort. E-signature and accelerated decisions provide this environment. That ultimately means that more customers, even those with modest needs, will be properly covered.

Expense and Hassle.  Finally, many carriers hold the mistaken belief that the incorporation of e-signature capability, with all of its tech and compliance issues, is difficult and costly to implement. Each company will have to look at their own platform and experience to determine what e-signature solution will work best. Sureify, with multiple significant launches of life insurance processes that include e-signature, can be a valuable resource for helping to guide e-signature decisions.

There are many internal audiences who should be involved in vetting the e-signature solution.  Among the most important:

Compliance.  An insurer’s compliance area should play a significant role in selection and due diligence of any company that is being considered to offer e-signature services. Compliance issues will always arise – it is best to work through them early in the building process and provide thoughtful answers, information and insights along the way for those whose job it is to protect your customers. 

Sales.  The most customer-facing departments, especially the sales force, should also be involved in the selection process. This may include agents, call center management, and internal marketing and sales. The incorporation of this modern technology may bring up questions and concerns from customers that are similar to those above. Each person who communicates with customers on any level should be extremely knowledgeable about how the e-signature process works and why it is ultimately beneficial and safe. 

There will, of course, be instances where others who will be impacted should be brought in to build consensus for an e-signature solution. In all discussions, it’s important to remember that the team assembled must keep the customer experience top of mind. 

Secure, effective technology can go a long way toward keeping an insurer robust and thriving, and a good insurtech partner is a great resource in the quest for an e-signature solution that best meets budget and operational needs. There are many good options out there – but not having an e-signature capability isn’t one of them.