The Office of General Counsel issued the following opinion on November 28, 2007 representing the position of the New York State Insurance Department.
RE: Record retention and destruction by an insurance agent
Pursuant to the Insurance Law and regulations promulgated thereunder, how long must an insurance agency retain cancelled boat insurance policies, and may the agent destroy such records, without retaining any backup file, after the applicable record retention period has passed?
As set forth below, there are a number of record retention requirements under the Insurance Law and regulations promulgated thereunder applicable to a licensed agent. After the applicable record retention period has passed, neither the Insurance Law nor the regulations promulgated thereunder impose a duty on an agent to continue maintaining those records. Nevertheless, the Department recommends that an agent make prudent business decisions regarding the destruction of its insurance records.
The inquirer reports that her agency is licensed to do a property/casualty insurance business. The inquirer states that her agency has maintained files for cancelled boat insurance policies that date back to 1993/1994. The inquirer asks about the time period that her agency must retain those files, and the guidelines governing their destruction.
There are a number of record retention requirements applicable to a licensed agent.
Pursuant to § 243.2(d) of N.Y. Comp. Codes R. & Regs. tit. 11, Part 243 (2003) (Regulation 152), an insurer shall require its agent to be subject to the same record retention requirements as the insurer itself with respect to records that otherwise would be retained by the insurer. Section 243.2(d) of Regulation 152 states:
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.
Section 243.2(b) of Regulation 152 sets forth specific record retention requirements, and that provision imposes upon an agent, with respect to the records described above, a minimum six calendar year period to retain each insurance contract or policy; each insurance application where no policy or contract was issued; every claim file; any complaint record involving a charge of unfair trade practices; and "[a]ny 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 report was subject to review."
An insurance agent or broker may destroy original paper documents that are transferred to a "durable medium," as such term is defined in the regulation, pursuant to § 243.3(a)(3). That provision states:
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.
N.Y. Comp. Codes R. & Regs. tit. 11, § 20.4(b) and (c) (2001) (Regulation 29) provides that an insurance agent or broker using a premium account must maintain a book or other permanent account record that shows all receipts and disbursements of money, and that sets forth the details as described therein. 11 NYCRR § 20.4(c)(2) requires that a record to be kept by an agent or broker pursuant to § 20.4 “shall be preserved for at least the three-year period preceding the most recent fiscal year-end of the licensee.”
N.Y. Ins. Law § 2119(a) (McKinney 2006) requires that an insurance agent, broker or consultant retain every consulting fee agreement for at least three years. Section 2119(a)(2) states: “A copy of every such memorandum or contract shall be retained by the licensee for not less than three years after such services have been fully performed.” A similar retention record applies to insurance broker service fees, pursuant to N.Y. Ins. Law § 2119(c) (McKinney 2006).
After the applicable record retention period has passed, neither the Insurance Law nor the regulations promulgated thereunder impose a duty on an agent or broker to continue maintaining those records. Nevertheless, the Department recommends that an agent make prudent business decisions regarding the destruction of its insurance records. See OGC Opinion Number 07-09-07 (09/11/2007). As stated in OGC Opinion Number 07-05-13 (05/23/2007): “[T]he Department recommends that licensees retain the records for a period of time sufficient to satisfy applicable statutes of limitations and, where an action or claim is pending, for such period of time until the matter is resolved.”
For further information, you may contact Senior Attorney Robert Freedman at the New York City office.