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

George E. Pataki
Governor

Howard Mills
Acting Superintendent

The Office of General Counsel issued the following opinion on March 24, 2005, representing the position of the New York State Insurance Department.

Re: Records Retention Guidelines for Insurance Agents and Insurance Brokers

Questions Presented:

(1) What customer records must an insurance agent and insurance broker retain and for what time period?

(2) If an active insurance agent or insurance broker must retain customer records, must the licensee retain customer records after retirement and, if so, for what time period?

Conclusions:

(1) There is no specific prescription for customer record retention by insurance agents and insurance brokers under the Insurance Law or Insurance Department Regulations promulgated thereunder other than N.Y. Ins. Law § 2119(a) & (c) (McKinney 2000) (copy enclosed) and N.Y. Comp. Codes R. & Regs. tit. 11, § 20.4(b) & (c) (1991) (Regulation 29) (copy enclosed), that provide record retention requirements for customer records of insurance agents and insurance brokers. However, to the extent that an insurance agent or broker maintains customer records on an insurer's behalf, the insurance agent or broker is subject to the record retention requirements applicable to insurers in New York State pursuant to N.Y. Comp. Codes R. & Regs. tit. 11, Part 243 (1996) (Regulation 152) (copy enclosed). Regulation 152 addresses the required minimum time for retention of customer records by authorized insurers and certain other entities including Public Health Law Article 44 Health Maintenance Organizations.

(2) The Insurance Law and Regulations promulgated thereunder do not specifically address whether an insurance agent or insurance broker must retain customer records after retirement. For example, N.Y. Ins. Law § 2119 (McKinney 2000) does not contain an exception for a retired licensee from maintaining copies of the memorandum required thereunder.

Facts:

No facts were provided.

Analysis:

N.Y. Ins. Law § 2119(a) (McKinney 2000) requires that an insurance agent or broker consulting for a fee 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 charging a fee 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. An insurance agent may not charge such a service fee.

N.Y. Comp. Codes R. & Regs. tit. 11, § 20.3(b)(2) (1991) (Regulation 29) states: "An agent or broker who makes immediate remittance to insurers and assureds of such funds need not maintain a premium account for such funds." Section 20.4(b) & (c) of Regulation 29 provides 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."

Record retention requirements for authorized insurers, and certain other entities including Public Health Law Article 44 Health Maintenance Organizations, 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". Section 243.2(d) of Regulation 152 states:

(d) An insurer shall require, by contract or other means, that a person authorized to act on its behalf in connection with the doing of an insurance business, including a managing general agent, an administrator, or other person or entity, shall comply with the provisions of this Part in maintaining records that the insurer would otherwise be required to maintain. Notwithstanding the above, the insurer shall be responsible if the person or entity fails to maintain the records in the required manner. (Emphasis added)

Thus, an insurance agent or broker who is authorized to maintain customer records on an insurer's behalf may retain customer records as provided in Section 243.2(b) of Regulation 152. A policy record described in Section 243.2(b)(1) of Regulation 152 for each insurance contract or policy must be retained by such insurance agent or broker for six calendar years after the policy is no longer in force or until the filing of the report on examination which the record was subject to review, whichever is longer. Pursuant to Section 243.2(b)(2) of Regulation 152, an application where no policy or contract was issued must be retained by such insurance agent or broker for six calendar years or until after the filing of the report on examination in which the record was subject to review, whichever is longer. Pursuant to Section 243.2(b)(4) of Regulation 152, a claim file must be retained by such insurance agent or broker for six calendar years after all elements of the claim are resolved and the file is closed or until the filing of the report on examination in which the claim file was subject to review, whichever is longer.

Note that the content of the claim file, pursuant to Section 243.2(b)(4) of Regulation 152, "shall show clearly the inception, handling and disposition of the claim, including the dates that forms and other documents were received." Section 243.2(a) of Regulation 152 states:

(a) 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.

Thus, requirements applicable to retention of a claim file are not limited to Regulation 152. N.Y. Comp. Codes R. & Regs. tit. 11, § 216.11 (1988) (Regulation 64) states:

To verify compliance with this Part and related statutes, Insurance Department examiners will investigate the market performance of insurers. To enable department personnel to reconstruct an insurer's activities, all insurers subject to the provisions of this Part must maintain within each claim file all communications, transactions, notes and work papers relating to the claim. All communications and transactions, whether written or oral, emanating from or received by the insurer shall be dated by the insurer. Claim files must be so maintained that all events relating to a claim can be reconstructed by the Insurance Department examiners. Insurers shall either make a notation in the file or retain a copy of all forms mailed to claimants.

In the circumstances where an active insurance agent or insurance broker was required, pursuant to contract, statute, or regulation, to retain customer records, the Insurance Law and Regulations promulgated thereunder do not specifically address whether the insurance agent or broker must retain customer records after retirement. For example, N.Y. Ins. Law § 2119 (McKinney 2000) does not contain an exception for a retired licensee from maintaining copies of the memorandum required thereunder.

The Insurance Department recommends that all insurance agents and insurance brokers would be prudent to retain customer records for a period of time sufficient to satisfy applicable statutes of limitation and, where an action or claim is pending, for such period of time until the matter is resolved. In addition, if an insurance agent or insurance broker obligated itself by contract with its principal, the insurer or insured, to retain records for a period of time, then such obligation, if legally enforceable, must be satisfied, subject to an alternative acceptable to the principal.

Note that the Office of General Counsel has issued many opinions regarding record retention. These opinions may be accessed on the Insurance Department's website (www.ins.state.ny.us).

For further information please contact, Senior Attorney Robert Freedman at the New York City Office.