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

George E. Pataki
Governor

Gregory V. Serio
Superintendent

The Office of General Counsel issued the following opinion on May 7, 2003 representing the position of the New York State Insurance Department.

Re: Times for record retention applicable to insurers, insurance agents, and insurance brokers

Question Presented

What are the record retention requirements for customer records of insurers, insurance agents, and insurance brokers applicable to automobile insurance?

Conclusion

N.Y. Comp. Codes R. & Regs. tit. 11, Part 243 (1996) (Regulation 152) provides the required minimum time for record retention of customer records by domestic and foreign licensed insurers. N.Y. Ins. Law § 2119(a) & (c) (McKinney 2000) and N.Y. Comp. Codes R. & Regs. tit. 11, § 20.4(b) & (c) (1991) (Regulation 29), provide record retention requirements for customer records of insurance agents and brokers.

Further, there are additional record retention requirements for customer records applicable to automobile insurance sold through the Assigned Risk Plan (hereinafter "NYAIP"). Producers who receive fees pursuant to Section 21.C. of the NYAIP Manual (March 2003 Distribution) are subject to N.Y. Ins. Law § 2119(c) (McKinney 2000). Section 15.A.1.c. of the NYAIP Manual (March 2003 Distribution) provides for a specific period of record retention for producers that place insurance for an owner/applicant who is not a licensed driver. Section 15A.1.f. of the NYAIP Manual (March 2003 Distribution) provides a general minimum time for producers to retain "business files".

Facts

You represent that two insurers informed you that the time for record retention by insurance brokers and insurers is three years and five years respectively. While the three year period for insurance brokers applicable to retention of the memorandum signed by the party to be charged a service fee pursuant to N.Y. Ins. Law § 2119(c) (McKinney 2000) is accurate, there are other required minimum periods for record retention applicable to insurance agents and brokers. The record retention period for insurers of certain records is six years.

Analysis

Record retention requirements for domestic and foreign licensed insurers are contained in N.Y. Comp. Codes R. & Regs. tit. 11, Part 243 (1996) (Regulation 152), which is entitled "Standards of Records Retention by Insurance Companies".

The following insurance records and retention periods contained in Section 243.2(b) of Regulation 152 are relevant:

1. Policy record for each insurance contract or policy

Longer of (1) six calendar years after the date the policy is no longer in force, or (2) until after the filing of the report of examination in which the record was subject to review.

2. Application where no policy or contract was issued.

Longer of (1) six calendar years or (2) until after the filing of the report of examination in which the claim file was subject to review.

3. Claim file.

Longer of (1) six calendar years after all elements of the claim are resolved and the file is closed, or (2) until after the filing of the report of examination in which the claim file was subject to review.

*Office of General Counsel Opinion 88-79 (National Insurance Law Service) states with reference to insurers: "It should be noted that absence of a file because of premature destruction cannot serve as justification for subsequent delay of failure to pay a claim."

4. Complaint record required to be maintained under Chapter IX (Unfair Trade Practices) of N.Y. Comp. Codes R. & Regs. tit. 11.

Six calendar years after all elements of the complaint are resolved and the file is closed.

5. Any other record.

(1) Six calendar years from its creation, (2) until after the filing of the report of examination in which the record was subject to review, or (3) the conclusion of an investigation in which the record was subject to review.

In addition, please note that Section 243.2(f) of Regulation 152 provides that an insurer is not precluded from maintaining records for a longer period than record retention periods prescribed in Regulation 152.

Section 243.2(d) of Regulation 152 provides that any "person or entity" authorized to act on the insurer's behalf can maintain records that the insurer would otherwise be required to maintain; however, the insurer "shall be responsible if the person or entity fails to maintain the records in the required manner."

In addition, N.Y. Ins. Law § 2119(a) (McKinney 2000) requires that an insurance agent or broker consulting for a fee, that does not include procurement of the insurance policy, retain a copy of the memorandum therein described signed by the party to be charged and specifying or clearly defining the amount or extent of such compensation, for not less than three years after such services have been fully performed. N.Y. Ins. Law § 2119(c) (McKinney 2000) requires that an insurance broker making a service charge for services therein described, that include procurement of the insurance policy, retain a copy of the memorandum therein described signed by the party to be charged and specifying or clearly defining the amount or extent of such compensation, for not less than three years after such services have been fully performed. N.Y. Comp. Codes R. & Regs. tit. 11, § 20.4(b) (1991) (Regulation 29) sets forth requirements for insurance agents and brokers who maintain a premium account to maintain books, records, and accounts in connection with their business. Section 20.4(c)(2) of Regulation 29 states: "Where this section requires a record to be kept by a licensee, it shall be preserved for at least the three-year period preceding the most recent fiscal year-end of the licensee."

N.Y. Comp. Codes R. & Regs. tit. 11, § 243.1(a) (1996) (Regulation 152) includes the NYAIP in the definition of insurer. Thus, time for record retention by insurers focused on the customer relationship with insureds applicable to automobile insurance sold through the NYAIP is set forth by Regulation 152. Section 15. of the NYAIP Manual (March, 2003 Distribution) entitled "PERFORMANCE STANDARDS FOR COMPANIES WRITING NEW YORK AUTOMOBILE PLAN BUSINESS" does not regulate record retention by insurers who provide insurance through the NYAIP.

There are several bases of required minimum time for record retention by insurance agents and insurance brokers who are certified as "producers" by Section 15A. of the NYAIP Manual (March 2003 Distribution). Producers who receive fees pursuant to Section 21.C. of the NYAIP Manual (March 2003 Distribution) are paid solely for procuring the insurance policy. Thus, N.Y. Ins. Law § 2119(c) (McKinney 2000) regulates such fees received by both insurance agents and insurance brokers who are certified as producers. Section 15A.1.c. of the NYAIP Manual (March 2003 Distribution) provides for a minimum record retention period of not less than three years if the owner/applicant is not a licensed driver. Section 15A.1.f. of the NYAIP Manual (March 2003 Distribution) states: "Producers are required to maintain all New York Automobile Insurance (AIP) business files for a minimum of three years."

For further information you may contact Senior Attorney Robert Freedman at the New York City Office.