New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

George E. Pataki
Governor

Gregory V. Serio
Superintendent

The Office of General Counsel issued the following opinion on August 18, 2004, representing the position of the New York State Insurance Department.

RE: Electronic Signature

Question Presented:

May a life insurance agent have an applicant sign a life insurance application by the entry of their social security number into an interactive voice response (IVR) system using a telephone keypad?

Conclusion:

Yes, provided that the system utilized in connection with obtaining electronic signatures renders the agency and the company in compliance with all applicable provisions of the New York Insurance Law and regulations.

Facts:

An inquirer describes a process whereby a life insurance agent will utilize a system for recording the telephone conversation and application process between the agent and the applicant. The telephone conversations will be stored recorded and stored electronically and can be readily accessed. After completing the verbal part of the application process, the agent will transfer the client into the IVR to complete the application through electronic signature. The applicant will use the keypad on his touch-tone telephone to enter his social security number, which will be the unique identifier and which will constitute the electronic signature. The system will convert the digits input by the applicant into a tone that the IVR recognizes and translates back to a numerical digit.

Analysis:

The federal Electronic Signatures in Global and National Commerce Act ("E-Sign"), 15 U.S.C.A. §§ 7001-7031 (West Supp. 2003) provides that electronic records may not be denied legal effect, validity or enforceability solely because they are created electronically.

New York State enacted the Electronic Signatures and Records Act ("ESRA") as part of Chapter 4 of the Laws of 1999, adding the State Technology Law as new Chapter 57-A. ESRA is consistent with federal E-Sign. The term "electronic signature" is defined in N.Y. State Tech. Law § 102(3) (McKinney 2003) as:

an electronic sound, symbol or process, attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the record.

N.Y. State Tech. Law § 104 (McKinney 2003) authorizes the electronic facilitator to establish rules and regulations governing the use of electronic signatures to which you may wish to refer. See N.Y. Comp. Codes R. & Regs. tit. 9, Part 540 (2003). N. Y. State Tech. Law § 105(3) (McKinney 2003) provides that an electronic record has the same force and effect as non-electronic records. Neither the law, nor the Office of Technology regulations implementing the law, mandates the use of any particular electronic signature technology.

Both federal E-Sign and ESRA authorize the use and acceptance of electronic signatures and electronic records in commercial transactions, and confirm their legal validity. The Department issued Circular Letter No. 33 (1999) in which it advised that insurance transactions may be effected by electronic means since most existing provisions of the Insurance Law do not proscribe such activities. This Department has consistently encouraged the use of electronic transactions in the insurance business. In addition, the Department has opined that an electronically signed document may constitute a record that is maintained in a durable medium within the meaning of N.Y. Comp. Codes R. & Regs. tit. 11, § 243 (1996) (Regulation 152).

Nonetheless, every Department licensee that chooses to incorporate electronic signatures into its business operation must decide for itself which electronic signature technology is best for it. Before a licensee implements an electronic business process, the process should be reviewed in order to assure that the electronic technology it wishes to adopt and the business process changes such technology entails will keep it fully in compliance with applicable provisions of the New York Insurance Law and regulations.

For further information you may contact Supervising Attorney Joan Siegel at the New York City Office.