Claire-ification

Are you a member with a question? Contact IA&B VP-Advocacy Claire Pantaloni, CIC, CISR to find the answer at 717-918-9202 or ClaireP@IABforME.com.

QUESTION:

Can I send a customer his policy in PDF or give him portal access, instead of a paper copy?

ANSWER:

Going paperless has become mainstream, and agency staff may not think anything of emailing a policy in PDF or sending an access link. However, issues can occur if statutory conditions or requirements are not met.

When sending a policy via email or making it available through a web portal, the first thing to keep in mind is that doing so is an electronic transaction. As a result, you must make sure you comply with the laws and regulations governing electronic transactions, namely the federal ESIGN and/or the state’s version of the Uniform Electronic Transactions Act. While we are all used to accessing websites, uploading, and downloading on a daily basis and may take these tasks for granted, the laws that govern electronic transactions and electronic delivery – and the requirements they spell out – must be followed for the delivery to be considered complete and valid.

Remember that receipt of the policy is often the first line of defense in an E&O lawsuit when there is a coverage dispute. That’s because the duty to read the policy falls on the insured. However, that defense can only be invoked if the insured received the policy. The ability to prove that policy delivery was properly executed is therefore critical.

The main issues which are triggered with electronic delivery of a policy are the following:

1. Was disclosure to transact electronically provided and consent secured?

In order to transact electronically, an agency must first provide a disclosure covering specific items and secure consent to do business electronically from the insured. A full resource on the subject and a sample disclosure form are available on IA&B’s website.

If you are using a third-party vendor or platform to deliver the policies, it may be possible to embed the disclosure and consent as part of the process itself. This could be accomplished with a popup box and an “I agree” button. You can inquire with the vendor. If not, you can simply follow the suggestions in IA&B’s online resource to capture the customer’s consent.

2. How is delivery of the documents ascertained and the insured’s duty to read the policy triggered?

When policy access is through a consumer portal rather than via an email attachment, it is important to alert the insured to access his or her policy and review it. At this time, we are still not aware of any case law that would shed light on how accessing the policy through a consumer portal affects when the insured is considered to have “received” the policy and, as a result, when the insured’s duty to read the policy is triggered. Absent any case law, common sense would dictate that the email notifying of policy availability and urging the insured to access the portal could serve as the trigger. A best practice would be to send the email notification as soon as the document is available, and bolster the email by urging the customer to:

▲ read the policy, and

▲ contact the agency immediately with any questions or concerns.

Finally, it is worth mentioning that beyond policy delivery and access, when using electronic communication methods, agency staff need to be mindful of possible restrictions under privacy laws or regulations. When sending an email or attaching a document in PDF that contains personally identifiable information, is the information secured when transmitted electronically? That is a privacy and cybersecurity conversation for another day….

To learn more about the best way to comply with the electronic delivery requirements, visit: IABforME.com/electronic-transactions

This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice. Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Insurance Agents & Brokers nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/or any other government documents cited in this document.