The Office of General Counsel issued the following opinion on August 1, 2003 representing the position of the New York State Insurance Department.
Re: Licensing and Appointment Documentation Records Retention
Are screenprints of license and appointment information derived by the insurer from either the Departments web site or the Producer Data Base, rather than the copies of licenses and appointment confirmations, acceptable documentation for a market conduct examination?
An insurers producer licensing records must be kept in accordance with the provisions of N.Y. Comp. Codes R. & Regs. tit. 11, § 243.0243.3 (1996) (Reg. 152). Section 243.3(a)(1) of Reg. 152 requires that records be maintained in a durable medium. Accordingly, provided that the screenprints meet the standards contained in Reg. 152, they would be acceptable.
No facts were presented. The inquiry is general in nature.
Section 243.0 of Reg. 152 states that the purpose of the regulation is:
to clarify and provide minimum recordkeeping requirements regarding the origin, maintenance and reproduction of information by insurers doing business in this state and certain other entities."
Section 243.1(b) of Reg. 152 defines "records" as meaning "books, records, files, securities, data compilations and other documents.
Section 243.1(c) of Reg. 152 defines a "Durable medium" as meaning:
a medium for maintaining a record where the properties of such medium provide reasonable assurances against tampering with the information contained in the original and degradation of any reproduction generated, and where the reproduction is an exact copy of the original. The medium may include paper; facsimile; or photographic, micrographic, magnetic, optical, mechanical or electronic media.
Section 243.2(a) of Reg.152 provides that with respect to records required for examination purposes:
In addition to any other requirement contained in Insurance Law, section 325, any other section of the Insurance Law or other law, or any other provision of this Title, every insurer shall maintain its claims, rating, underwriting, marketing, complaint, financial, and producer licensing records, and such other records subject to examination by the superintendent, in accordance with the provisions of this Part.
With respect to producer licensing records, Section 243.2(b)(5) of Reg. 152 provides that:
Except as otherwise required by law or regulation, an insurer shall maintain:
(5) A licensing record for six calendar years after the relationship is terminated for each Insurance Law licensee with which the insurer establishes a relationship. Licensing records shall be maintained so as to show clearly the dates of appointment and termination of each licensee.
Section 243.2(e) of Reg. 152 provides in relevant part that:
(e) The records shall be readily available and easily accessible to the superintendent in accordance with Insurance Law, section 310. The records shall be in a readable form. If any such records are kept in a language other than English, they shall be accompanied by accurate translations. Upon request of the superintendent, the insurer shall provide a hard copy of the record, or, if the record is maintained in a medium which is used by the superintendent, the insurer may provide the record in that medium. . . .
Section 243.3(a) of Reg. 152 provides that:
(1) Records and indices of records required to be maintained under this Part may be maintained in any durable medium.
(2) Where the original record was not a paper document, an insurer shall be able to produce information or data which accurately represents a record of communications between a person or entity and the insurer or accurately reflects a transaction or event.
(3) Upon transfer of an original record to a durable medium, the insurer may destroy the original record after assuring that all information contained in the original record, including signatures, handwritten notations, or pictures, is contained in the durable medium.
(4) If the insurer does not retain the original paper record, or if there was no original paper record, a duplicate or back-up system sufficient to permit reconstruction of the record shall be established at a separate location. The record may be retained in any form permitted by this Part.
Section 243.3(c) of Reg. 152 requires an insurer to:
establish and maintain a records retention plan. The plan shall include a description of the types of records being retained, the method of retention, and the safeguards established to prevent alteration of the records. Such plan shall be provided to the superintendent upon request. The insurer shall certify the accuracy of any records that are provided in accordance with its record retention plan.
Section 243.3(d) provides that "nothing in this Part shall be construed as requiring the utilization of any particular method of record retention by any insurer.
In accordance with Regulation 152, an insurer may utilize any method to retain its records, including producer licensing records, provided that such records are retained in a durable medium. With respect to producer licensing records, the regulation requires that an insurer must be able to produce licensing records that show clearly the dates of appointment and termination of each licensee. Such records must be maintained for six calendar years after the relationship is terminated for each Insurance Law licensee with which the insurer establishes a relationship.
Thus, although the Department does not require copies of the actual licenses and appointment confirmations as the only acceptable documentation for a market conduct examination, an insurer, in choosing a records retention method, should be certain that the records will be retained in a durable medium and that required information will have been preserved and will be readily available and easily accessible. See Office of General Counsel Opinion dated 1-15-2003, copy attached.
For further information you may contact Supervising Attorney Joan Siegel at the New York City Office.