On the trail of snail mail

Imagine asking your insurance company to email you your policy renewal forms and finding out that your insurer can only send it to you by regular mail.    The digital age enables consumers to do most of their personal business online like paying your mortgage or bills, shopping, checking in for a flight.  You name it, people are doing it on their phone or computer.


Imagine again that you are a person who travels a lot and tends to move around constantly and you prefer receiving your mail electronically because the most reliable point of contact for you is your email address.  But wait…your insurer cannot accommodate your request because they cannot email you your renewal documents.


This is precisely the law in California: Insurers are precluded from sending their policyholders auto, home, or commercial policy renewals by electronic transmission.


The consumer demand to conduct business online is substantiated by a recent J.D. Power and Associates, US Auto Insurance study (2012), concluding that Gen Y consumers (born from 1974-1994) have clearly shown a preference toward interacting online, and that specifically:


“Among customers who utilize multiple contact channels to resolve an issue, 40% of Gen Y customers begin online, further underscoring their preference to seek answers to their questions via this channel.  In contrast, the most frequent starting point for Boomers (born from 1946-1964), who have used multiple channels to resolve an issue, is their agent (40%). 

That same study further concluded that over 50 percent of auto insurance quotes are obtained online and online quotes initiate a majority of new policy sales.

Similarly, a 2011 Fiserv Consumer Trends Survey showed online bill payments now accounts for 50 percent of all bill payments.  Leading information technology research firm Gartner Inc. reports that worldwide sales of tablet devices are estimated to reach 369.2 million by 2016.”


California is the lone state in the nation that continues to have a statute that expressly disallows insurers from providing policy renewals by electronic transmission.  This is hardly consistent with California’s reputation to be the bellwether state when it comes to technological innovation.  California is home to Silicon Valley and the invention of many ground breaking and life changing devices.


To keep up in today’s 24/7 world the name of the game is digital access and communication.   Businesses must adapt their practices and customer services models to meet these growing and changing consumer preferences.


In recognizing the growing consumer demand for conducting business online, other states have taken steps to modernize their laws.


For example, this year 10 states introduced legislative measures to allow insurers to send documents to policyholders electronically or make insurance policies available to policyholders through a website.  To date, two e-delivery bills have been signed into law by Idaho Governor Butch Otter and Kansas Governor Sam Brownback, and similar measures are pending approval in Alaska and Arizona.


This week, California legislators will have the opportunity to modernize California’s insurance law and give consumers more choices and flexibility in managing their insurance policy.


SB 251, authored by Senator Ron Calderon (D-Montebello), will give California’s 24 million auto owners, 5.8 million home insurance policyholders, 650,000 condominium policyholders, and 1.2 million renters insurance policyholders a choice to access their policy renewals online.  It is important to note that SB 251 allows consumers to “opt in” for receiving policy renewals electronically, provides important consumer safeguards, and establishes a reasonable regulatory oversight process as suggested by the California Department of Insurance.


SB 251 is a necessary public policy step as the nation continues to embrace electronic transactions and as consumers demand more paperless information.  Indeed, SB 251 is consumer and environmentally friendly.  It should be noted that California has demonstrated its ability to respond to consumer demands in the past as it did last year when it approved legislation to allow drivers to show proof of insurance via a smart phone.  This modernization effort needs to continue by updating an antiquated law established in 1999 disallowing insurers from providing policy renewals electronically, and it starts with approval of SB 251.

Ed’s Note: Armand Feliciano, Vice President Association of California Insurance Companies


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