News | December 2, 1999

Electronic Transactions Can Work, NAMIC Says

The National Association of Mutual Insurance Companies (NAMIC) has issued the second in a series of Advocacy Reports on regulatory topics. This report focuses on the Uniform Electronic Transactions Act (UETA).

In a 17-page report entitled: " 'Virtual' Insurance Consumers: What Protections Should Exist For Them?" NAMIC reviewed the UETA model adopted by the National Conference of Commissioners for Uniform State Laws in July, applicable bills before Congress, and a UETA law recently enacted in California (Senate Bill 820).

The report then analyzes these bills in an insurance context and asks the question: what protections should exist for consumers who purchase insurance products over the Internet? The report concludes with a series of recommendations for the National Association of Insurance Commissioners (NAIC) to consider as they contemplate how to protect consumer interests in a rapidly evolving electronic commerce world.

The report finds the model to be a "procedural" one, which establishes a legal framework for electronic transactions that grants them the same legal effect as a paper transaction; and no evidence suggests that the UETA model abrogates any protections given to consumers under existing laws.

The report makes the following recommendations to the NAIC:

• The NAIC should adopt a resolution at its winter national meeting in December that urges the states to enact UETA laws in 2000;

• State insurance commissioners should agree to work in their respective states to ensure that any UETA legislation does not exempt certain Insurance Code requirements under the guise of protecting consumer interests;

• The NAIC Electronic Commerce and Regulation Working Group should finalize its white paper on electronic commerce, and should then focus its attention on a discussion about electronic signatures; and

• The NAIC Executive Committee needs to make a renewed commitment in 2000 in directing its working groups to projects that recognize the effect that the financial services reforms and the Internet will have on insurance processes, and analyze how regulators should adjust their practices and procedures to accommodate these changes.

The report has been sent to all state insurance commissioners.

Roger Schmelzer, vice president-regulatory affairs, said NAMIC decided to produce the Advocacy Reports, which will be issued on a periodic basis, to create "more frank discussion between the regulatory community and NAMIC on issues that affect the property/casualty insurance industry."

A copy of the report can be found at NAMIC's web site, www.namic.org/s/ev/virt.htm.

NAMIC intends to publish Advocacy Reports on regulatory matters as needed, Schmelzer said. NAMIC's first advocacy report, "Deregulating Commercial Lines: Is The Debate Headed In The Right Direction?" was issued in October.