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 December 5, 2001, representing the position of the New York State Insurance Department.

RE: Third Amendment to Regulation 29 (N.Y. Comp. Codes R. & Regs. tit. 11, Part 20 (2001))

Question Presented:

Does the Third Amendment to Department Regulation 29 (N.Y. Comp. Codes R. & Regs. tit. 11, Part 20) require that a disbursement check issued by an insurance agent or broker contain a full description of the insurance risk on it?

Conclusion:

No. The recent amendment does not require such information to be written on the memorandum portion of a check. The amendment, however, requires that certain information be maintained in a book or other permanent account record.

Facts:

An agency stated that it would have difficulty complying with N. Y. Comp. Codes R. & Regs. tit. 11, § 20.4(b)(2)(i)(a)(2)(v) (Regulation 29, Third Amendment) (2001). It believed that a description of the risk must be placed on the premium check remitted to the insurer. This would be difficult to comply with in those instances where clients insure multiple locations or vehicles: the agent pays pursuant to a company statement having numerous items.

Analysis:

There is nothing in Regulation 29 (N.Y. Comp. Codes R. & Regs. tit. 11, § 20.4 (2001)) which requires that a description of the risk be placed on the premium check remitted to the insurer.

The clear language of the Regulation requires that every licensee using a premium account must maintain a book or other permanent account record showing all receipts and disbursement of money and containing the details, including description of the risk, as indicated in N. Y. Comp. Codes R. & Regs. tit. 11, § 20.4(b)(2) (Regulation 29, Third Amendment) (2001). The Regulation further states in § 20.4(b)(4) that such record "may be kept in bound or loose-leaf book, or by means of a mechanical, electronic or other device."

For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.