Why group life insurance policies require wet signatures

Enrolling new employees in life insurance policies can involve a number of steps for employers. Not only do they have to ensure workers understand their coverage options and are comfortable with the premiums, but they may have to drive across the province to collect their signatures.

“I have a case where [the client has] about 45 employees, and they only have 10 or so working out of head office. They have about 35 embedded in clients’ offices,” says Chris Gory, president of Insurance Portfolio Financial Services Inc. in Toronto. He and two colleagues had to drive across town, visiting multiple office buildings and collecting individual life insurance enrolment forms.

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Some insurers will take a scanned or electronically signed copy at the time of enrolment but they won’t pay out a death claim unless the employer provides an enrolment form with a wet signature, says Gory. Other carriers require wet signatures from the beginning.

“There is no industry standard that exists for e-signatures at this time,” Wendy Hope, vice-president of external relations at the Canadian Life and Health Insurance Association, told Benefits Canada in an email.

Gory notes some employers, especially technology startups, are eager to be able to handle enrolment electronically.

“They’re always saying, ‘Hey, we can do everything else electronically. We can do our banking, we can pay our bills, we can sign documents with our lawyer electronically. Why can’t we sign insurance documents electronically?’” says Gory.

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Many property and casualty insurers permit electronic signatures. And according to Hartley Lefton, a partner at Dentons Canada LLP in Toronto, many law firms use electronic signatures in all documents other than those for really high-stakes transactions.

Provincial electronic commerce acts consider electronic signatures to be as valid as wet signatures in most situations. There are, however, a few key exceptions, including wills and powers of attorney, says Lefton. And that goes on to affect life insurers. “Designating a beneficiary in a life insurance policy would be equivalent or sufficiently analogous to a will to fall into that [excluded] category,” he notes. In both situations, the party in question has died and can no longer answer any questions about the intent.

Signing documents electronically also gives rise to fraud risk, although Lefton says technology has mitigated and almost eliminated that issue. “Whether we’re looking at a PDF in an email from an email address you recognize and seems legitimate given your experience with the person signing, or certain technology solutions like DocuSign, which have time and date stamps and other credibility providers . . . a lot of the risk goes away,” he says.

Lefton also notes life insurers may want wet signatures for their own internal risk checks. However, he adds that, “over time, as we get more comfortable with technology and as new technology situations come up, I think we may find there are other ways of moving away from wet signatures.”

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