STATE OF NEW YORK
25 BEAVER STREET
NEW YORK, NEW YORK 10004
The Office of General Counsel issued the following informal opinion on March 6, 2000.
Records Retention Requirements
If Alpha New Yorks (ALPHA-NY) parent company performs some of ALPHA-NYs financial recording, do the original records need to be kept in New York?
Is ALPHA-NY required to retain in New York the originals of the contracts it executes with its Sales Associates?
Unless ALPHA-NYs Board of Directors has adopted a plan providing otherwise (and that plan has been approved by the Superintendent), New York law requires that an insurer keep its original financial records within New York State.
ALPHA-NY is not required to maintain originals of the Sales Associate contracts within New York.
ALPHA-NY, a New York domestic insurer, is a subsidiary of the Alpha Company. The Alpha Company takes care of a number of ALPHA-NYs financial recording functions.
The requirements governing the maintenance and treatment of an authorized insurers records are contained in Section 325 of the Insurance Law, N. Y. Ins. Law § 325 (McKinney Supp. 1999-2000), and Insurance Regulation 152, N.Y. Comp. Codes R. & Regs. Tit. 11, § 243 (1999). Section 325 of the Insurance Law provides, in pertinent part, as follows:
(a) Every domestic insurer and every licensed United States branch of an alien insurer entered through this state shall, except as hereinafter provided, keep and maintain at its principal office in this state its charter and by-laws (in the case of a United States branch a copy thereof) and its books of account, and if a domestic stock corporation, a record containing the names and addresses of its shareholders, the number and class of shares held by each and the dates when they respectively became the owners of record thereof, and if a domestic corporation the minutes of any meetings of its shareholders, policyholders, board of directors and committees thereof. If any such records are kept in a language other than English, they shall be accompanied by accurate translations thereof.
(b) A domestic insurer and a licensed United States branch of an alien insurer entered through this state may keep and maintain its books of account without this state if, in accordance with a plan adopted by its board of directors and approved by the superintendent, it maintains in this state suitable records in lieu thereof; provided, however, the superintendent may after notice and hearing direct such insurer to return all or any of its books of account to this state if such return is reasonably necessary to protect the interests of the people of this state or to permit their inspection in this state by a director, a shareholder, or, in the case of a mutual insurer, a policyholder, who has shown to the satisfaction of the superintendent that he has made an application to such insurer for inspection of such books in good faith and for a necessary and legitimate purpose, and that such insurer has either declined to permit such inspection without this state or to agree to pay any additional expenses reasonably to be incurred by the applicant or his agent or attorney in connection with the inspection of such books as a result of their maintenance without this state. If in the judgment of the superintendent delay in the return of any or all books of account of such insurer may be hazardous, or may cause irreparable injury, to the people of this state or to the policyholders of such insurer he may direct the return thereof without notice and hearing.
N.Y. Ins. Law § 325 McKinney Supp. 1999-2000.
As indicated by the above-quoted statute, domestic insurers, such as ALPHA-NY are required to keep the originals of certain of their records in New York State. The statute further provides, however, that an insurer may adopt a plan providing that originals need not be maintained in New York. Such a plan must be approved by the Superintendent and must provide for the maintenance of suitable copies or substitutes.
With respect to your first specific inquiry, it would appear that, absent the adoption of a plan as described above, ALPHA-NY would be required to maintain its original financial records within New York State. This is because Insurance Law Section 325(a) expressly includes "books or account" among the items required to be maintained within New York. Concerning your second specific inquiry, however, there is no requirement that originals of such documents need to be maintained in New York.
For further information, contact Senior Attorney Michael Campanelli of the Departments New York Office.