State Lawmakers Consider Remote Notarization Model

InsuranceNewNet, Allison Bell (March 22, 2021) —

A team of state insurance legislators wants to help people prove their signatures and documents  are real without making in-person visits to notaries.

The lawmakers, members of the National Council of Insurance Legislators (NCOIL), are working on a draft of a Remote Notarization Model Act.

NCOIL included the draft model in a packet of materials for the group’s upcoming spring meeting in Charleston, South Carolina. NCOIL’s Financial Services and Multi-Lines Issues Committee plans to discuss the draft during a meeting session scheduled for April 17.

The Background

U.S. insurers often require a policyholder to use a notary public to verify the policyholder’s identify and verify whether that individual has signed a record.

Traditionally, most states have required individuals to get most or all notarizations done in person.

In recent years, the rise of the internet has increased interest in remote notarization services.

Virginia has been electronically notarized documents, in conjunction with the use of videoconferencing systems, since 2012. Since then, other states have adopted permanent remote notarization laws or regulations.

More states have put temporary rules in place since the COVID-19 pandemic started. But some  lack permanent remote notarization measures, and the rules that are in effect vary widely from state to state, according to PropLogix, a company that helps real estate sellers with online notarizations.

As of Feb. 18, for example, California, Delaware and North Carolina had no permanent remote online notarization laws, according to PropLogix.

The National Notary Association offers an extensive library of information about state notarization laws.

Insurers and Online Notarization

Frank O’Brien, a vice president with the American Property Casualty Insurance Association, talked about remote notarization at an NCOIL Financial Services and Multi-Lines Issues Committee session in December.

O’Brien told committee members that state legislators should consider eliminating some notarization requirements, support use of online notarization services when notarization is necessary, and make states’ rules for any notarization requirements that still exist more similar, according to an NCOIL session summary.

The in-person notarization process is an example of something life insurers need to change, said Jordan Martell, innovation counsel at Pacific Life, during a Life Insurance and Financial Planning Committee session. He said updating the notarization process could make life insurance more popular, by simplifying the online purchasing process.

Members of Congress considered two identical remote online notarization bills, H.R. 6364 and S. 3533, during the 116th Congress. The bills had support from both Democrats and Republicans.

The American Council of Life Insurers and the National Association for Fixed Annuities were part of a coalition of industry groups that wrote to congressional leaders in support of the bills.

However, there was some friction. Catic, a real estate support services group, suggested that the bills could let the federal government interfere in what has traditionally been an area left in the hands of the states. It also could cause conflict with local customs and practices and expose local real estate agents and real estate lawyers to more competition from out-of-state entities.

NCOIL Efforts

NCOIL is a Manasquan, New Jersey-based group for state legislators who work with insurance issues. It often develops model acts, or sample language for bills. State legislators can choose whether to use the models when developing their own bills.

The current version of the Remote Notarization Model Act draft in the NCOIL meeting packet appears to be similar to the text of an emergency remote online notarization act that New Jersey adopted in April 2020, in response to the COVID-19 emergency.

That New Jersey act is set to expire when the emergency ends.

Like the New Jersey emergency act, the NCOIL model draft starts with definitions of terms. Drafters define “identity proofing,” for example, to mean a “process or service by which a third person provides a notary public or an officer authorized to take oaths, affirmations, and affidavits, or to take acknowledgements with a means to verify the identity of a remotely located individual by a review of personal information from public or private data sources.”

In one section, the drafters include provisions a notary could use to handle notarizations for individuals located outside the United States as well as for individuals located inside the country.

A state that created a law based on the model could set its own standards for the communication technology and identity proofing processes used.

The draft encourages a state to consider any notarial standards set by organizations such as the Mortgage Industry Standards Maintenance Organization and the National Association of Secretaries of State.