Insurance & Electronic Signature Laws

Electronic signatures provide valid authorization for many types of insurance transactions, and also serve as notification when the policy holder or insurance agent receives a document. Federal government agencies are required to accept electronic signatures due to federal law, and some of these agencies offer health and other types of insurance to American citizens. Electronic signatures are valid for most insurance transactions, with policy cancellation being one of the main exceptions in electronic signature laws.

Signature Regulations

• When an insurer uses electronic signatures, some regulations which apply to paper documents still apply. If state or federal law requires the use of a certain font size to ensure that customers can read policy details, the electronic document must retain this font size. A state may also define a minimum font size or a font style on an insurance document to ensure that a citizen can read it. If a regulation requires a signature on a paper document to appear in a customer's own handwriting, this requirement no longer applies since typing out an electronic signature is considered valid consent.

Receipt Confirmation

• Many laws specify the time period in which a document must be sent and received. The electronic signature is considered valid when the recipient receives the document. According to the state of West Virgina, the federal Uniform Electronic Transactions Act does not change any deadlines for delivery of documents when they are electronically delivered. If a signed document requires additional confirmation that the insurer or policy holder received the document, the software in use must also provide acceptable confirmation.

Health Insurance

• Under the federal Health Insurance Portability and Accountability Act (HIPAA), use of an electronic signature is optional. The customer who holds the health insurance policy must agree to the use of an electronic signature. The insurer must also agree to use electronic signatures. The HIPAA includes additional standards which define whether a certain type of electronic signature is acceptable for a health insurer to implement.

Exceptions

• When an insurer sends a notice to a policy holder about the cancellation of health or life insurance benefits, an exception to the Electronic Signatures in Global and National Commerce Act applies. An electronic signature is not valid for the purpose of canceling health or life insurance, with the exception of the cancellation of an annuity, according to the National Telecommunications and Information Administration. Some states have also passed similar legislation on policy cancellation which matches this federal law.