By Robyn Hall Administration costs and processing times for IFAs and health insurance providers will...
By Robyn Hall
Administration costs and processing times for IFAs and health insurance providers will drop dramatically under Government plans to give digital signatures 'explicit' legal recognition.
Industry experts also believe that commodity-type health insurance products such as term assurance will benefit from the plans and will soon be offered directly over the internet by insurers.
The planned legislation is being put forward in the Electronic Communications Bill which was unveiled in November.
It aims to develop the UK as the best environment worldwide in which to trade electronically. By April 2000, electronic signatures will be given recognition by the courts and IFAs and product providers will be able to use them as a secure electronic alternative to paper.
Under the plans, existing laws that insist on the use of paper will be swept away wherever an electronic option makes sense.
Possible growth areas for insurers include term assurance. A spokesperson for the Association of British Insurers said: "With a legally binding digital signature and term assurance being a straightforward contract, it will not be long before providers start offering this for sale directly over the internet, and this may well be an area that will develop."
Paul Rowlings, technical marketing manager at Guardian Financial Services, said: "This will make online business transactions faster and more efficient. Whether it is a threat or an opportunity will depend on the way IFAs react to it.
"If the technology develops then there will be an opportunity for IFAs to also offer advice online."
The Bill also outlines a 'kitemarked' self-regulatory approvals scheme that will look to ensure minimum standards of quality and service. Businesses will be able to check who has sent an electronic message, ensure that it has not been tampered with and that no one else has been able to read it on the way.
Ken Shipman, managing director of Norwich-based Shipmans Independent Financial Services, said: "The Bill has the potential to revolutionise the way that we do business. In some cases, we will not even have face-to-face contact with the client. However, I think the public will need to develop a little more faith in e-mail before this really takes off."
Paul Cowman, group product manager for Pearl Assurance, said: "If back office operations are geared up then it will speed things up no end, as it will be a real alternative to snail mail.
"It should also help cut costs in some areas and especially so in administration. There will always be products where you need advice, but for something like term assurance, e-commerce could in the long run prove to be a major milestone."
