October 1 - 3, 2000, The Westin Providence, Providence, R.I.

What the New Digital Signature Regulations Mean to Insurers Thomas O. Wells, CEO and president, b4bpartner

Federal e-Signature Law Protects Agents/Brokers
By Meg Green, Meg.Green@ambest.com

The new federal electronic signature law, which went into effect Oct. 1, protects brokers and agents from being liable for using electronic signatures, said Thomas O. Wells, founder and chief executive officer of b4bpartner Inc.

Agents and brokers were concerned that they could be held responsible for problems resulting from electronic signature usage, Wells said. But the law includes a provision that states agents and brokers can't be held liable for any deficiency in the electronic signature or record process if the agent or broker hasn't engaged in intentional misconduct and didn't help develop the electronic signature process.

The new law gives electronic signatures the same validity as wet ink signatures and gives electronic signatures the same legal effect as hard-copy paper records, Well said.

"For the first time, a fax is the same as a paper record," he said.

The law doesn't specify what kind of technology companies should use to formalize their electronic signature processes, Wells said, noting there are five different methods that can be used today. Those five methods are:

• No Authentication: user types his name on a document agreeing to its terms.

• Shared Secret: user has a unique log-in and password.

• Digital Certificate: a user registers with a digital certificate authority and receives private software that resides on the individual's computer and is used to encode or encrypt messages.

• Biometrics: technology in which special hardware is attached to a computer and identifies users based on a fingerprint, iris scan or voice or face recognition.

• Smart Cards: a card issued to a user that is inserted into special hardware attached to a computer. The individual uses a password with the card.

b4bpartner Inc., based in Coral Gables, Fla., is an Internet solutions software company that produces integrated, personalized Web vault and electronic signature systems.