In 2022, the Insurtech phenomenon saw investments of 200 million, up 230% from 2021, and forecasted to reach 500 million at the close of this year. The market is constantly moving, and innovation and R&D projects are being increasingly encouraged. The insurance industry has long been active in responding to this market trend by outlining the “Insurance of the Future,” a world we will often hear about.
The Italian market appears to be still premature in the area of digitization of the insurance sector, according to the Insurtech Investment Index, which sees Italy as a country that is still unaware of the need for investment so as to not to be left behind or drowned by the competition in the current scenario.
The low penetration of the insurance market, coupled with a low level of digitization, makes Italy an attractive market for foreign players, who invest decidedly large sums and then have a greater profit in the long run.
When talking about innovation, the topic of digitization, which now pervades all sectors as the end-user expects to enjoy a 360-degree digital experience, cannot be excluded. This is also true in the Insurtech sector, and we will see step by step how this sector faces the need to produce legally valid digital contracts in a scenario that is increasingly regulated so as to derive solutions that coordinate regulatory compliance and process efficiency.
Which events triggered the Insurtech revolution?
The path toward digitization of the insurance industry, much like banking, was initially held back by bureaucratic problems, resulting in slow and hindering results. But things have changed as a result of the new insurtech trend, a noteworthy fresh opportunity that is being seized by industry players.
Here, we are talking about a real revolution that is triggered by several factors, including:
- Digital Transformation, has impacted all industries in a broad and profound way, and the insurance industry is no exception; in fact, these changes are very important for the industry;
- Increased competition, triggered by a definite trend toward the opening of the market, with the emergence of new players and unprecedented user choice. In short, competition is an increasingly complex challenge, but it’s a field that is dense with opportunities for companies, who can no longer afford to remain rigid and tied to dynamics that are now out of date.
These two topics actually strengthen and stimulate a process of continuous innovation, which is an important theme in the insurtech field.
To properly meet new market needs, it is a priority to optimize steps in dematerialization, document and contract signing processes, and electronic storage of business records, including for reference and research purposes.
The industry must be able to dematerialize documents and automate workflow management in order to be able to sign agreements and contracts with legal value, including through tools such as digital signatures, while at the same time meeting regulatory requirements.
Document dematerialization
Today, archives are no longer made only of paper documents, and the reason why is very simple: the digital document has enormous advantages over its physical counterpart. These advantages are:
- Economic: related to the production and storage of paper documents;
- Temporal: in terms of time and efficiency; just think about the complexity of searching by hand amidst stacks of papers versus the simplicity—in contrast—of performing a keyword search in a well-indexed digital document;
- Correctness: digitized management, through well-structured and, where possible, automated standard processes, offers a significant reduction in errors, resulting in increased security.
Thanks to the dematerialization of documents and the digitization of processes, the management of customer relations changes completely. By extracting data from digital documents, a company has the ability to really “know” its customers, to divide them into increasingly specific clusters based on homogeneous characteristics, and to carry out an increasingly tailored dialog all the way to personalization.
While it’s true that the electronic document has significant advantages over the paper document, it is also true that certain precautions must be taken and precise requirements must be met to ensure its full validity. When we talk about documents and contracts related to the insurance sector, we need to keep in mind not only the rules that generally regulate all IT documents—the Digital Administration Code and AgID Guidelines, for instance—but also pay attention to the proper use of electronic signatures and any provisions of industry regulations, such as the IVASS regulation.
Moreover, as we will see in a moment, we must distinguish between two possible scenarios:
- Dematerialization of documents, i.e., scanning of native paper contracts with handwritten signatures;
- Digitization of processes, using documents that are natively digital and signed with electronic or digital signatures.
In the transition from analog to digital management, it’s highly likely to be faced with both situations, each of which, as we shall see in a moment, deserves the proper considerations.
Digital signature: a tool to serve the Insurtech revolution
As we reported earlier, there are several tools that meet the market needs for supporting the new insurtech trend.
The digital signature, for example, is a special type of qualified electronic signature issued by an authorized Certification Authority, and it is used for signing contracts with the public administration in written form (e.g., in procurement contracts), and also between private individuals (businesses and professionals), when, at the conclusion of business negotiations, it’s preferable to have digital contracts that are legally valid (and avoid the exchange of signed hard copies). Signing with a digital signature, or FEQ, confers the highest degree of security regarding the evidentiary value of the contract itself. The digital signature and advanced electronic signature, in fact, according to Article 20 of the CAD, make the computer document eligible to meet the requirements of written form under Article 2702 of the Civil Code. In addition, Article 21 of the CAD specifies the types of contracts for which a digital signature or qualified electronic signature is required, under penalty of invalidity, and the types for which at least an FEA, or a digital signature or FEQ, must be used for their validity.
In the context of contracts and documents that are signed when taking out an insurance policy for example, it’s always necessary to provide for the use of an advanced electronic signature.
In addition, it may be useful to affix a time stamp to the digitally signed contract in order to associate a time reference that is certain and enforceable against third parties with the signature and the contract itself. Alternatively, the time stamp that is placed on the storage package at the time the digital insurance contracts are entrusted to the conservator also contributes to the purpose.
Digital preservation of insurance contracts
Document preservation is a key issue for companies in the insurance industry, as it is in any other business, not only in terms of compliance but also to add value to the business. The use of digital documents helps the entire document management cycle, starting with the acquisition of documents.
Therefore, even insurance documents and contracts, if produced in the form of computerized documents, must be brought into digital preservation in accordance with regulations in order to protect their integrity and value. Digital preservation must be performed in accordance with the provisions of the CAD and the relevant AgID Guidelines. The easiest and safest way is to turn to an outsourced conservator with the appropriate skills, policies, and infrastructure that is able to ensure compliant digital preservation in accordance with the requirements identified by law.
Are there any special precautions to follow when storing insurance contracts in digital format?
As we have said, in general, the provisions of the CAD and AgID Guidelines must be respected, for example regarding the formats and metadata used.
As far as preservation deadlines are concerned, we must distinguish between the deadlines for depositing contracts and documents of this type to the conservator, and the minimum period during which they must be kept in digital preservation.
Once the contracts or policies have been signed, they can also be sent for digital preservation immediately. In fact, it’s recommended to initiate and conclude the preservation process as soon as possible. Remember that the digital preservation process is associated with the storage packages, and thus with the computerized documents that comprise them, a time stamp and thus a reference that is enforceable against third parties.
Once brought into storage, for civil law purposes, contracts must be kept for at least 10 years, which starts from the moment when the legal effects of the contract itself cease and not from the moment it is signed.
Finally, you must be aware of the type of personal data in the contracts, and the possible presence of special or judicial data (Articles 9 and 10 of EU Regulation 679/2010, better known as GDPR). Since the responsibility for the processing of personal data always rests with the data controller, i.e., the company or insurance company, it is good practice to conduct an appropriate risk assessment to determine the processing and security policies to be adopted. In addition, an assessment can also be useful to best reconcile retention timelines with any provisions regarding the retention of certain categories of data.
From paper to digital: how to scan an analog contract
We have seen that an insurance contract can be born digitally, and may be signed through an advanced, qualified, or digital electronic signature solution, and then be subject to digital preservation in accordance with regulations—a process, therefore, that is completely paperless.
But what happens when we are faced with natively analog contracts with handwritten signatures that we would like to bring into digital storage?
In this case, great attention must be paid to the process of dematerialization and destruction of the paper original, precisely because of such elements as manually affixed signatures.
First of all, remember that computer copies of analog documents must, in any case, be produced in accordance with the provisions of Article 22 of the CAD and the AgID Guidelines. In particular, the conformity of the copies to the paper original should be attested by a notary public or public official by direct comparison of each individual copy with the relevant original. Alternatively, a duly structured and certified massive scanning process can be used through process certification, the new tool introduced by Annex 3 of the AgID Guidelines.
However, in the presence of handwritten signatures, additional precautions must be taken before disposing of the paper. In fact, in the event of a dispute regarding the signature’s authenticity, an appraiser will have to have the paper original available in order to carry out his or her examination. Therefore, the original document cannot be destroyed, unless a notary specifically intervenes to authenticate the signature on the scanned document, obviously always before the destruction of its analog counterpart.
Even if paper originals have to be retained, the dematerialization of analog originals can still support a unified and digital management of the documentary corpus, facilitating access and consultation operations.