Magazine article Risk Management

S.761 -- the Electronic Signature Law

Magazine article Risk Management

S.761 -- the Electronic Signature Law

Article excerpt

According to wording on the books, "[S.761 is] an act to regulate interstate commerce by electronic means by permitting and encouraging the continued expansion of electronic commerce through the operation of free-market forces and other purposes." What that means for risk managers: contracts with electronic signatures will be as valid as those inked with pen on paper.

Of course there are other aspects of S.761 that have potentially far-reaching ramifications. The Electronic Signatures in Global and National Commerce Act will eliminate costly paperwork and speed transactions, allowing businesses negotiating contracts with each other to send binding agreements without having to send paper documents. "One of the main benefits will be how quick and efficient it will make much of our work," says Frances Oliver, risk manager for Centex Corporation in Dallas, and member of RIMS' external affairs team. "There are times when work comes to a standstill because you're waiting for signed documents. Now that electronic signatures are as legally binding as pen and ink documents, our lives will be made that much easier. For risk managers who have to compile certificates of insurance, the advantages of a more efficient system are exciting."

As a law which purports to spur the digital economy and encourage further technological enhancement, S.761 provides an incentive for companies to put more information online by eliminating paper record-keeping requirements for financial institutions that move to secure electronic storage systems. It gives new technologies like fingerprint scans and encryption keys (See Risk Management, January 2000, "Eye-Tech") the legal weight of ink-and-paper signatures, making it easier for both companies and consumers to do business over the Internet.

"In the next six months, getting the proper software is going to be one of the biggest issues for many in the insurance industry," says Neal McCoggs, a technologies analyst for Priory Road Research, a Washington group that monitors technological trends. "People may be fearful of what is happening, this change at such a rapid pace, but they are even more fearful of not keeping up."

So how does a risk manager keep up while prudently dealing with these rapid changes at the same time? The beauty of S.761 is that it creates a legal framework that allows the parties involved to decide on their own rules for engaging in electronic commerce. Though, according to some, therein lies the beast as well. "Congress basically punted by failing to define exactly what a signature is," says Jamie Lewis, CEO of The Burton Group. …

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