In recognition of the changing technological environment and opportunities for e-commerce in insurance, The Illinois Department of Insurance is encouraging the industry to modernize insurance regulations, reports Laura Kotelman, regional manager and senior counsel, Property Casualty Insurers Association of America (PCI; Des Plaines, Ill.). The recent result of the department's push is an Illinois bill that permits insurance companies to use electronic notification to inform producers of policy cancellations. Pending Gov. Rod Blagojevich's signature, the bill will become effective on Jan. 1, 2005.
Although the Illinois Department of Insurance hasn't reported any complaints about insurers that currently notify their producers of cancellations electronically, Illinois law doesn't specifically allow for the incorporation of updated technology, a situation that makes things confusing for insurers, Kotelman contends. Current legislation governing the cancellation process doesn't specifically permit or restrict the practice of electronic notification, she notes. "Technically, someone could complain" about a company that notifies its producers of cancellations electronically, Kotelman says. As a result, "The statute [is being] modernized to reflect the way that modern business transactions are completed."
Although electronic notifications of cancellations are not restricted under current regulation, passage of the bill may encourage insurance carriers to explore electronic notification to cut costs and improve the efficiency of their notification process. Kotelman relates that one of PCI's member companies saved $57,000 in bulk mailing costs each year after it made the switch to electronic notifications.