The Office of General Counsel issued the following informal opinion on April 10, 2001, representing the position of the New York State Insurance Department.
Re: Interpretation of Regulation 169 and Section 3425
1. Are there circumstances where a privacy notice under Regulation 169 would not be required for a policy that is subject to N.Y. Ins. Law § 3425 (McKinney 2000)?
2. May an insurer use Sample Clause A-5 of Regulation 169 where the insurer uses independent adjusters to adjust claims and outside attorneys, accountants, and auditors for certain services?
1. A policy is obtained primarily for "personal, family or household" purposes under Regulation 169 if the majority of the premium is attributable to such purposes and the insured is an individual. In certain circumstances, insurance policies that are subject to § 3425 are not primarily for "personal, family, or household purposes" and hence privacy notices would not be mandated by the regulation.
2. Sample Clause A-5 is geared to joint marketing circumstances, and would have to be modified to address independent adjusters, and outside attorneys, accountants, and auditors.
No facts are specified. This inquiry is of a general nature.
1. N.Y. Comp. Codes R. & Regs. §. 11 Part 420.1(b)(1) (2000) states that Regulation 169 applies to:
Nonpublic personal financial information about individuals who obtain, seek to obtain or are claimants or beneficiaries of products or services primarily for personal, family or household purposes from licensees. This Part does not apply to information about companies or about individuals who obtain products or services for business, commercial, or agricultural purposes. (Emphasis supplied.)
N.Y. Ins. Law § 3425 (McKinney 2000) establishes rules regarding cancellation and non-renewal in regard to "covered policies", which are commonly referred to as "non-commercial policies", as contrasted with "commercial policies", which are governed by N.Y. Ins. Law § 3426 (McKinney 2000). For the most part, the definition of covered policy in § 3425 clearly relates to exposures that are of a non-business nature, and is to be treated as "personal, family, or household". But N.Y. Ins. Law § 3426(a)(2)(B) (McKinney 2000) includes as part of the definition of covered policy the following:
(B) loss of or damage to real property used predominantly for residential purposes and which consists of not more than four dwelling units, other than hotels and motels.
Under this provision, for example, a policy insuring a building containing four residential dwelling units is subject to Section 3425 even though the insured may be a corporation and the building was non-owner occupied and used strictly for rental purposes. Such a policy would not be "primarily for personal, family or household purposes" under Regulation 169. A policy is obtained primarily for personal, family or household purposes, if the majority of the premium is attributable to such purposes and the insured is an individual. A policy issued to a corporation would not come within Regulation 169.
There are circumstances where the insurer may not be able to readily establish whether the policy would be used primarily for personal, family or household purposes. Also, an insurer may find that it would be less costly to simply give the notice to any person subject to § 3425, even if Regulation 169 does not require it.
2. Regarding the second inquiry about Sample Clause A-5, while the exception in N.Y. Comp. Codes R. & Regs. tit. 11 § 420.13 (2000), in regard to service providers and joint marketing, would apply where the insurer uses independent adjusters to adjust claims and outside attorneys, accountants, and auditors for certain services, the Sample Clause itself is geared to marketing, and would not be appropriate. However, it could be easily modified to address other circumstances. It should be noted that the clauses are just intended as guidelines, and a regulated party may change them to fit particular circumstances.
For further information, you may contact Supervising Attorney Paul A. Zuckerman.