Alliance Hails Enactment of VT Electronic Commerce Bill

June 2, 2003

The Alliance of American Insurers hailed Vermont Governor Jim Douglas’ (R) for signing into law HB 148, a version of the Uniform Electronic Transactions Act (UETA), which supports use of electronic records and signatures. (See IJ Website May 23)

The organization said the new law “will greatly enhance insurers’ and policyholders’ ability to conduct the business of insurance electronically.” It also noted that it contains a so-called “bomb shelter” provision to protect Vermont residents from application of the Uniform Computer Information Transactions Act (UCITA), and that the Alliance had worked for the measure’s passage.

“UETA was developed in 1999 by the National Conference of Commissioners on Uniform State Laws (NCCUSL). About 40 states have a version of UETA in place to encourage use of electronic records and signatures,” said the announcement. “It assures that electronic records and signatures are not found to be invalid merely because they are in electronic form. UETA does not require any person to use electronic records or signatures, nor does it mandate the type of technology used to transmit the signature.”

Frank O’Brien, vice president of the Alliance’s New England Region, indicated, “This aspect of HB 148 allows insurers to conduct business electronically without prescribing a particular kind of technology. This increased ease of operation will result in cost savings and conveniences that will benefit consumers and insurers alike.”

Concerning the ‘bomb shelter’ provisions included in the Vermont law, O’Brien explained that the Alliance opposes the UCITA provisions, as it feels they give “too much power to software companies in negotiating software licenses.” Specifically UCITA allows software licenses to name the state whose law will control a software license, regardless of whether the jurisdiction whose law is selected bears a reasonable relation to the transaction. “This ‘choice of law’ provision raises the specter that a software company could select the law of a state that has enacted UCITA (Maryland or Virginia) as the controlling law of a software license, even if those states have nothing to do with the transaction,” O’Brien noted.

The law signed by the Governor, “prevents UCITA from being imported into states, such as Vermont, that have not enacted UCITA,” O’Brien continued. “The bomb shelter provides that a contractual choice of law provision in a computer information agreement (i.e., a software license) is voided if it results in the application of UCITA.”

Vermont joins Iowa, North Carolina and West Virginia as states with UCITA ‘bomb shelter’ legislation.

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