The digital transformation — including the rise of fintech and changing customer behaviors — is rapidly disrupting the insurance industry. Fintech is the combination of finance and technology. With 88% of U.S. consumers adopting fintech to handle their finances, it’s now a mainstream expectation in all industries, including insurance.
Electronic signatures are one example of how fintech is helping insurance companies create a frictionless sales and service experience while minimizing risk and reducing errors.
The Importance of Digital Signatures for Insurance Businesses
Unlike a new pair of shoes or a gaming system, an insurance policy isn’t something most people look forward to buying, so improving the customer experience can make a big difference in sales.
People are accustomed to being able to compare, shop, and complete purchases online. Because insurance policies must be signed and verified, online signature options are a necessary step in the process. Insurance brokers who don’t offer the option of an electronic form and digital signature face a competitive disadvantage in the marketplace.
4 Benefits of Electronic Signatures in the Insurance Industry
On the front line of sales, electronic signatures provide benefits to the insurance carrier and the customer. The online signing process caters to consumer habits while also providing an operational advantage. Read on to learn about some of the most significant advantages and use cases for electronic signatures in the insurance business.
1. Robust Authentication and Identity Verification
You have a legal responsibility to ensure that only authorized users gain access to certain systems, networks, and transactions. Electronic signature platforms implement several measures to address authentication and verification issues, including:
- Authentication guarantees that the person signing a document is who they claim to be. Digital signatures often use two-factor authentication (2FA), which requires users to verify their identity in two separate ways before accessing the system.
- Digital certificates are used to prove the ownership of a public key. The certificate includes information about the key and the identity of its owner.
- Signature creation through a unique hash (a string of letters and numbers) ensures that the signature will become invalid if the document is altered in any way after being signed.
- Encryption technology keeps the signature and the associated data secure. This ensures that even if the data is intercepted, it can’t be read or altered without the decryption key.
2. Compliance With Industry Regulations
The insurance sector holds public trust and must comply with specific regulations. Electronic signature providers must demonstrate compliance with these regulations. This includes documenting data protection efforts, ensuring the appropriate technical and organizational measures are in place to protect personal data, and being able to demonstrate these measures to authorities through audit trails.
Noncompliance can result in severe penalties. Under the Health Insurance Portability and Accountability Act (HIPAA), fines can reach up to $50,000 per violation. Under the General Data Protection Regulation (GDPR), fines can be up to 20 million euros or 4% of a company’s global annual revenue, whichever is greater:
- HIPAA compliance for electronic signatures involves using secure methods of transmission and storage to protect signature data and associated personal information. Any electronic signature solution used by a HIPAA-covered entity must have strong encryption protocols in place to protect data, both at rest and in transit, as well as comprehensive access controls and logging features to track who accesses the data and when.
- GDPR compliance gives individuals greater control over personal data and obligates businesses to protect it. For e-signature providers, this means providing clear information about the data they collect during the signing process, how it’s used, where it’s stored, and how long it’s retained. Users must also be able to access their data, correct it, and request its deletion.
3. Improved Claims Processing
Electronic signatures have the potential to significantly improve claims processing in the following ways:
- Processing speed: Electronic signatures enable customers to sign digital documents in seconds from anywhere, reducing the claims cycle time considerably.
- Error reduction: Online signature platforms can automatically validate information, ensure all required fields are filled, and securely store signed documents, reducing the likelihood of errors and the need for rework.
- Document management: All signed documents can be stored securely in a digital format, making them easy to search for, access, and retrieve. This is particularly useful in claims processing, where tracking and managing documents is a key part of the process.
- Cost reduction: By automating the claims process and eliminating the need for physical document handling and storage, an insurance company can save significantly on operational costs.
4. Streamlined Policy Issuance and Renewals
With electronic signing, you can simplify your workflow and speed up the process of issuing policies and renewals. You can get signatures on insurance policies in minutes instead of days or weeks.
Instead of having to manually send out renewal notices and wait for the returned signed documents, you can automate the entire renewal process. Customers can be notified of their upcoming renewal, review their policy details, and provide their electronic signature online. This makes renewals faster, more efficient, and more convenient for both the insurer and the customer.
Use Cases for Online Signatures in the Insurance Industry
You can prepare, send, and manage insurance documents across the customer lifecycle with an electronic signature provider. Some common use cases include:
- Policy applications and renewals: When customers apply for a new policy, they can review and sign their applications electronically, speeding up the approval and issuance process. Similarly, when renewing a policy, you can send the renewal documents electronically, and customers can sign and return electronic records faster.
- Claims documentation and authorization: When a customer submits a claim, there are typically several documents that need to be signed. These could include the initial claim form, the insurer’s authorization to obtain medical records or other necessary information, and settlement agreements. Online signatures eliminate time-consuming bottlenecks in these business processes.
- Agent and broker agreements: Insurance agents and brokers typically have contractual agreements with insurers that outline the terms of their relationship. These agreements can be lengthy and may require signatures on several pages. With online signatures, these agreements can be executed more quickly and efficiently, and the signed documents can be stored and retrieved digitally, making it easier to manage these relationships.
- Underwriting and risk assessments: Underwriters assess risk and determine policy premiums. They often must sign off on risk assessments, underwriting decisions, and other documents. Using electronic signatures, underwriters can sign documents from anywhere, leading to faster policy issuance and improved operational efficiency.
Safe, Industry-Compliant E-Signing for Insurance Documents
The insurance sector is changing just as rapidly as other industries. Digital solutions like electronic signatures are industry-compliant, secure, and efficient, allowing you to satisfy customers’ expectations.