New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on June 28, 2001, representing the position of the New York State Insurance Department.

Re: N.Y. Comp. Codes R. & Regs. tit. 11 § 420.0 – 420.24 (2001)

Questions Presented:

I) If a transaction falls under N.Y. Comp. Codes R. & Regs. tit. 11 § 420.13 (2001), as well as N.Y. Comp. Codes R. & Regs. tit. 11 § 420.14 (2001) or N.Y. Comp. Codes R. & Regs. tit. 11 § 420.15 (2001), is the licensee required to enter into the contractual agreement provided for in N.Y. Comp. Codes R. & Regs. tit. 11 § 420.13(a)(1)(ii) (2001)?

2) May a licensee provide a copy of the declaration page from the insured’s policy to the insured’s mortgage company, bank, or leasing company, all non-affiliates, without obtaining an opt-out notice?

3) Do an insurer’s transactions with a terminated agent come within the purview of any of the exceptions to the limits on disclosure of financial information?

Conclusions:

1) No. If a transaction falls under N.Y. Comp. Codes R. & Regs. tit. 11 § 420.14 (2001) or N.Y. Comp. Codes R. & Regs. tit. 11 § 420.15 (2001), as well as under N.Y. Comp. Codes R. & Regs. tit. 11 § 420.13 (2001), a contractual agreement is not required.

2) Yes. See N.Y. Comp. Codes R. & Regs. tit. 11 § 420.15(a)(2)(i) (2001).

3) It depends on the nature of the transactions.

Facts:

No facts were provided. The inquiry is general in nature.

Analysis:

N.Y. Comp. Codes R. & Regs. tit. 11 § 420.13(a)(1) (2001), which contains exceptions to the opt out requirements, provides:

The opt out requirements in sections 420.7 and 420.10 of this Part do not apply when a licensee provides nonpublic personal financial information to a nonaffiliated third party to perform services for the licensee or functions on the licensee’s behalf, it the licensee:

(i) Provides the initial notice in accordance with section 420.4 of this Part; and

(ii) Enters into a contractual agreement with the third party that prohibits the third party from disclosing or using the information other than to carry out the purposes for which the licensee disclosed the information, including use under an exception in section 420.14 or 420.15 of this Part in the ordinary course of business to carry out those purposes.

N.Y. Comp. Codes R. & Regs. tit. 11 §§ 420.14 and 420.15 (2001) provide additional exceptions to the opt out requirements; however, they do not include the condition specified in N.Y. Comp. Codes R. & Regs. tit. 11 § 420.13(a)(1)(ii) (2001) that the licensee enter into a contractual agreement with the third party to whom it is disclosing the information. It is the Department’s opinion that if the transaction in question falls under N.Y. Comp. Codes R. & Regs. tit. 11 § 420.14 (2001) or N.Y. Comp. Codes R. & Regs. tit. 11 § 420.15 (2001), as well as N.Y. Comp. Codes R. & Regs. tit. 11 § 420.13 (2001), N.Y. Comp. Codes R. & Regs. tit. 11 §§ 420.14 and 420.15 (2001) govern and therefore, the licensee is not required to enter into a contractual agreement with the third party.

Whether a licensee may release a copy of the insured’s declaration page to the mortgage company that holds the mortgage on the insured’s property or, with respect to an automobile policy, whether a licensee may release a copy of the insured’s declaration page to the bank that issued the loan on the vehicle or to the leasing company, it is the Department’s opinion that such transactions would come under the following exception: N.Y. Comp. Codes R. & Regs. tit. 11 § 420.15(a)(2)(iv) (2001) provides an exception to the initial notice required by N.Y. Comp. Codes R. & Regs. tit. 11 § 420.4(a)(2) (2001) and the opt out provisions in N.Y. Comp. Codes R. & Regs. tit. 11 §§ 420.7, 420.10 (2001) for a licensee that discloses nonpublic personal financial information to "persons holding a legal or beneficial interest relating to the consumer".

With respect to whether an insurer’s transactions with a terminated agent come within the purview of any of the exceptions to the limits on disclosure of financial information, the Department cannot provide a definitive response because it would depend on the nature of the transactions with the terminated agency.

For further information you may contact Supervising Attorney Joan Siegel at the New York City Office.