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

The Office of the General Counsel issued the following informal opinion on January 2, 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 agents and brokers to maintain a permanent record for receipts and disbursement of money showing a detailed description of the insured vehicle or multiple vehicles for automobile insurance policies, or may there be a more general description such as "auto policy"?

Conclusion:

The purpose of the new amendment is to require that minimum standards of recordkeeping are maintained as evidence of compliance with the statutory mandates on handling fiduciary funds. Your proposed description "auto policy" is too general, particularly when there are multiple policies covering multiple vehicles.

Facts:

This opinion addresses concerns about complying with the Third Amendment to Regulation 29 (N.Y. Comp. Codes R. & Regs. tit. 11, § 20.4) (2001), as to minimum details for receipts, which requires a description of the risk as it relates to automobile insurance policies. Specifically, this opinion addresses situations where vehicles are frequently being added, subtracted, or substituted on insurance policies and that, if too much detail is required, an office may make an error. Therefore, it would be preferred to use a more general description like "auto policy" to eliminate confusion and errors.

Analysis:

The purpose of the new amendment is to require that minimum standards of recordkeeping are maintained as evidence of compliance with the statutory mandates on handling fiduciary funds. N.Y. Comp. Codes R. & Regs. tit. 11, § 20.4(b)(2)(i)(a)(1) (v) (Regulation 29, Third Amendment) (2001) requires that a permanent record showing receipt and disbursement of money in trust for insurers and insureds be maintained and to include therein a description of the risk ("vehicle type, property description, liability exposure, etc."). The Third Amendment states further in tit. 11, § 20.4(b)(3) that "Every licensee who is required to maintain a premium account shall maintain accounting records in a manner that clearly reflects the nature and purpose of the transaction and accurately and fairly states or measures or properly accounts for the money or valuable consideration exchanged in the transaction." Accordingly, a licensee is responsible for keeping clear and accurate records for each transaction.

The specific information on each insured vehicle, such as the vehicle identification number, should be in licensee’s insurance records as it is necessary to provide such information to the insurer. Such detailed information must be maintained in a book or other permanent account record to comply with this Regulation as amended, which details the types and quality of records that will identify each transaction for each consumer from the books and records of the regulated parties.

Accordingly, the proposed description "auto policy" is too general, particularly when there are multiple policies covering multiple vehicles.

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