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

Eliot Spitzer
Governor

Eric R. Dinallo
Superintendent

The Office of General Counsel issued the following opinion on November 26, 2007, representing the position of the New York State Insurance Department.

RE: Format and Retention of Records

Questions Presented:

1) Is MVAIC subject to the records format and retention requirements of the New York Compilation of Codes, Rules and Regulations, title 11, Part 243 (Regulation 152)?

2) May MVAIC convert its paper records into an electronic format?

3) How long must MVAIC retain its records?

Conclusions:

1) Yes. MVAIC is subject to the record format and retention requirements of 11 NYCRR Part 243 pursuant to § 243.1(a) thereof.

2) Yes. MVAIC may convert its paper records into an electronic format that is a “durable record,” as defined in 11 NYCRR § 243.1(c).

3) The length of time that MVAIC must retain a record is the same whether such record is in hard copy or electronic format, and is dependent upon the type of record it is.

Facts:

To ensure it complied with statutory and regulatory requirements, MVAIC inquired about the proper manner for converting paper records into an electronic format and retaining those records.

Analysis:

Pursuant to New York Insurance Law § 5203 (McKinney 2000), MVAIC is a not-for-profit corporation whose members include all insurers authorized to write motor vehicle liability insurance in New York. It is a corporation created by statute to pay bodily injury damages and no fault benefits to qualified victims of motor vehicle accidents caused by uninsured motorists or unidentified motorists who leave the scene of the accident. See Insurance Law §§ 5201 and 5202. MVAIC is subject to examination by the Superintendent in accordance with Insurance Law § 309(a). See Insurance Law § 5222.

MVAIC is defined as an insurer in 11 NYCRR § 243.1(a) for purposes of Regulation 152, which regulates the format and retention of records held by insurers and certain other entities. Records include “books, records, files, securities, data compilations and other documents.” 11 NYCRR § 243.1(b). Pursuant to 11 NYCRR § 243.3(a)(1), records that must be maintained in accordance with 11 NYCRR § 243.2 must be maintained in a “durable medium,” which is defined in NYCRR § 243.1(c) as:

. . . 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.

Insurers and other entities that are subject to Regulation 152 must maintain “claims, rating, underwriting, marketing, complaint, financial, and producer licensing records, and such other records subject to examination by the superintendent.” 11 NYCRR § 243.2(a). The minimum period of time these records must be retained is stated in 11 NYCRR § 243.2(b), which reads in part, and is applicable to the MVAIC, as follows:

(4) A claim file for six calendar years after all elements of the claim are resolved and the file is closed or until after the filing of the report on examination in which the claim file was subject to review, whichever is longer. A claim file shall show clearly the inception, handling and disposition of the claim, including the dates that forms and other documents were received.

* * *

(7) A financial record necessary to verify the financial condition of an insurer, including ledgers, journals, trial balances, annual and quarterly statement workpapers, evidence of asset ownership, and source documents, for six calendar years from its creation or until after the filing of the report on examination in which the record was subject to review, whichever is longer.

(8) Any other record for six calendar years from its creation or until after the filing of a report on examination or the conclusion of an investigation in which the record was subject to review.

Maintenance and reproduction standards for records that insurers are required to keep pursuant to 11 NYCRR § 243.2 are set forth in 11 NYCRR § 243.3, which states:

(a) (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.

(b) The superintendent may perform on-site visits to determine that the insurer is in compliance with this Part.

(c) An insurer shall 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.

(d) Nothing in this Part shall be construed as requiring the utilization of any particular method of record retention by any insurer.

In sum, MVAIC is subject to the maintenance and retention provisions contained in Regulation 152, which permits the conversion of records from paper to electronic format, provided the electronic format constitutes a “durable record” as defined in 11 NYCRR § 243.1(c). Records that NYCRR Part 243 requires MVAIC to retain generally must be retained for six years, in accordance with 11 NYCRR § 243.3(b). Pursuant to 11 NYCRR § 243.3(a)(3), upon converting a record to a durable medium, the original record may be disposed of.

For further information you may contact Associate Attorney Sally Geisel at the New York City Office.