By David Partridge, Senior Marketing Manager
According to the Financial Ombudsman Service (FOS), insurers can now send this information electronically in accordance with the Electronic Transactions Act 1999 provided that:
- At the time the information was sent, it was reasonable to expect it would be readily accessible and usable for subsequent reference by the client
- The person who received the information consents to it being given by way of electronic communication.
FOS anticipates the most likely areas for potential dispute as result of these changes, which came into effect on 28 December 2013, are likely to be:
- Was consent provided?
- Was the correct email address used?
- What process was followed if the email bounced back?
- Could the recipient access the hyperlink or open the attachment?
When the Insurance Contracts Act 1984 was passed, businesses were still using telex machines and typewriters. There was no mainstream internet or email usage anywhere in the world and the introduction of mobile phone was still many years away.
A quirk in the Act’s wording, which stipulated that “the insurer shall give to the insured a statement in writing that sets out all the provisions in the contract” either in person or by post to their last-known address, meant that when the Electronic Transactions Act 1999 was eventually passed, the general insurance industry couldn’t benefit from the new provisions.
While that’s all changed now – and there are considerable efficiencies and cost savings to be gained by adopting electronic delivery practices – many brokers are yet to make the most of the opportunity. And given the mailing of a large policy wording weighing more than 500g costs upwards of $8 – while emailing a PDF or hyperlink is virtually free – the potential savings are sizeable.
Another alternative is to send the client the PDS on CD Rom, which is inexpensive to mail, easy to store and searchable. Lumley produces PDS documents on CD for most of its Business Package products.
From a client’s perspective, there are many benefits to receiving information in an electronic format, including:
- Easier record keeping with electronic/paperless storage
- Speed of delivery
- Environmentally friendly/sustainable way of communicating
- Improved document navigation through hyperlinks and search functionality.
Indeed, many clients now expect to receive documents electronically given it’s now a standard communication mechanism with many government departments, including the ATO and Medicare, as well as financial services providers and even accounting firms.
Curiously, even in countries where no historical barriers have existed to electronic delivery of insurance documents, many companies have been slow to take up the practice with the notable exception of travel insurance. According to international law firm Edwards Angell Palmer & Dodge, the European Union (EU) commissioned a report in 2009 that found little demand for the e-delivery of insurance certificates in Europe. Mind you, a lot has probably changed in the ensuing five years.
If your business does go down the electronic delivery path, it’s important to keep good records about the policyholder’s delivery preferences and implement an effective process for ensuring your client has received the information.
For example, you could send documents via secured, registered email, which provides proof of receipt. Or you could get the client to sign an acknowledgement letter using an e-Signature tool. And it goes without saying you should implement good processes for dealing with email bounce-backs.
With more and more companies moving their business dealings online – from filling in their BAS statements to storing their financial records in the cloud – it’s only a matter of time before they will come to expect their insurance providers to deliver their documentation electronically, too.
It will also be interesting to see which brokers grasp the opportunity of tying this change into a broader service model utilising Cloud technology. Undoubtedly, the opportunities for expense/service cost savings are significant, but the question remains: is the industry ready for it?
Is your brokerage making the most of electronic delivery? Do your clients want to receive information electronically?
This article has been published by Lumley Insurance, part of Insurance Australia Group (IAG), as general information only and is not a comprehensive account. For more information about introducing electronic delivery in your broking practice, please contact the compliance manager for your broker group or association.