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The rapid development of electronic international business to some degree expedited the process of paper documents transformed into electronic documents. Today, electronic platforms have become more and more common between corporates and trade service providers. Many corporates and service providers such as those in the shipping, forwarding, insurance industries and chambers of commerce can create their documents from online electronic platforms. The electronic insurance policy is one of them. The electronic insurance policy is an electronic version of an insurance document issued by an insurance company through its digital signature software and digital certification system. An insurance applicant can input their information and sign an insurance contract on their own terminal and, once the application has been approved by the insurance company, the applicant may send, store, or print the insurance document without stepping into an insurance company’s office. Due to its efficiency, convenience, and absence of any geographical restrictions, the electronic insurance policy has become wildly prevalent around the globe.
Reasons to use a printed electronic insurance policy
As the development of electronic commerce is at different stages in countries throughout the world, electronic documents like the electronic insurance policy may not be processed for technical reasons in certain countries. In my experience, the UCP Supplement for Electronic Presentation (eUCP) is rarely used because not all parties involved in the documentary credit can connect with each other electronically and use the standard information and data of a common third party service provider to process electronic records. In addition, not all documentary credits permit presentation of electronic records or some combination of paper documents and electronic records. For instance, if a credit is subject to UCP, not eUCP, then an electronic insurance policy cannot be accepted under the credit and instead a presenter must have the ability to convert the electronic insurance policy into a paper document by printout. However, are these printed electronic insurance policies still considered electronic documents? What is the difference between them and traditional paper-format insurance policies? Are they originals or photocopies? These are questions raised by the printed electronic insurance policy which are worthy of discussion.
Printed electronic insurance policy and electronic insurance policy
As stated, an electronic insurance policy is a type of electronic record issued by an electronic platform which could be transmitted electronically from one party to another. Once printed, the electronic insurance policy is no longer an electronic record even though it was generated by an electronic platform. Moreover, a paper presentation containing a printed electronic insurance policy is not a way of transmitting electronically. Therefore, a printed electronic insurance policy is not a true electronic insurance policy although it may be named an “Electronic insurance policy”.
Printed electronic insurance policy and traditional insurance policy
There are four differences between a printed electronic insurance policy and a traditional insurance policy. The first is name. A traditional insurance policy is usually named “Insurance policy”, while a printed electronic insurance policy may be named “E-POLICY”, “Electronic Insurance Policy”, “Digital Insurance policy”, or similar. The second is their number of originals. A traditional insurance policy is issued from the office of an insurance company in full set with a specified number of originals and any extra originals of them will be approved by the insurance company, while a printed electronic insurance policy is produced from the applicant’s own printer with no restrictions on the number of originals printed. The third difference is its signing. A traditional insurance policy is usually signed with an insurance company’s stamp and/or hand- signed by an authorized person, while a printed electronic insurance policy usually bears a digital signature, bar code, or stamp of the insurance company. The fourth difference is the insurance clauses. A traditional insurance policy bears the detailed terms and conditions of insurance on back of the document, while a printed electronic insurance policy usually has a blank back and makes reference to another source, like a web page, for the terms and conditions of insurance.
Originality of printed electronic insurance policy
A query concerning the originality of a printed document issued by an electronic platform was the subject of discussion in ICC Banking Commission Opinion TA843rev (2016). For documents presented in paper format and not by means of an electronic record, the Opinion’s Analysis states that: “in order to determine the originality of the document, UCP 600 article 17 is applicable. Banks are not concerned with the process of generating paper documents. A document checker examines the paper document as presented whether it appears on its face to be compliant.” Therefore, to determine the originality of a printed insurance policy, UCP600 article 17(b) should be applied: “A bank shall treat as an original any document bearing an apparently original signature, mark, stamp, or label of the issuer of the document, unless the document itself indicates that it is not an original.” And, according to ISBP 821 Paragraph A35(a): “Documents may also be signed with a facsimile signature … perforated signature, stamp, symbol … or any mechanical or electronic method of authentication.”
The digital signature of an insurance company is one of the electronic methods of authentication and a bar code could also be an electronic method of authentication based on ICC Banking Commission Opinion TA865rev2 (2017). As such, any printed electronic insurance policy bearing such method of authentication will satisfy the requirement of UCP600 Article 17 and should be treated as original.
Examination of printed electronic insurance policy
eUCP is the standard available to accommodate presentation of electronic records alone or in combination with paper documents. However, a printed electronic insurance policy is a paper document instead of an electronic record, for which the eUCP cannot be applied. Therefore, the printed electronic insurance policy contained in the presentation shall only be examined based on UCP600. According to ISBP 821 Paragraph A39: “Documents may be titled as called for in the credit, bear a similar title or be untitled.” So an insurance policy containing “electronic” in its name does not make it an electronic record. Document examiners should review insurance documents in terms of their content and format of presentation, not their name. Additionally, although a printed electronic insurance policy usually has a blank back and may make reference to terms and conditions contained in another source, document examiners have no need to review the back of an insurance policy nor the terms and conditions available at another source because banks do not examine general terms and conditions in an insurance document, as stated in ISBP 821 Paragraph K22. Therefore, unless prohibited by the credit, presentation of a printed electronic insurance policy itself will not constitute a discrepancy. As long as the printed electronic insurance policy complies with UCP, ISBP, and the credit’s terms and conditions, the printed electronic insurance policy is acceptable.
In conclusion, a printed electronic insurance policy is merely a format variation of a traditional insurance policy with the rights and obligations as well as clauses unchanged under the insurance contract. In my opinion, the situation is similar for other types of documents like printed electronic certificates of origin, printed electronic bills of lading, etc. Document examiners should pay greater attention and carefully review their processes with regard to these documents. In this complex and ever-changing era, documentary credit practice will advance over time and continually adjust. Banks must be prepared to meet complicated challenges in such dynamic environment.
* ZHAO Jing is a business manager in the trade service center at China Construction Bank. She has worked with documentary credits and documentary collections for eight years and has CDCS certification.