STATE OF NEW YORK
25 BEAVER STREET
NEW YORK, NEW YORK 10004
|David A. Paterson
James J. Wrynn
OGC Op. No. 10-09-15
The Office of General Counsel issued the following opinion on September 30, 2010 representing the position of the New York State Insurance Department.
Re: Records Retention In Electronic Media
(1) Must an insurer that maintains its records in electronic media, in order to comply with records retention requirements, retain more than one copy of an item in a policy record or a claims file?
(2) Must an insurer that maintains its records in electronic media, in order to comply with records retention requirements, retain a copy of each email in a chain of correspondence even if the final email contains the full text (including all attachments) of all preceding emails?
(3) Must an insurer that maintains its records in electronic media, in order to comply with records retention requirements, retain all copies of inspections and agent requests?
(4) Must an insurer that maintains its records in electronic media, in order to comply with records retention requirements, retain all pages of an Acord or other form of application for coverage, even if a page does not relate to the coverage being sought?
(1) No. An insurer is not required, in order to comply with records retention requirements, to retain more than a single copy of each document in a policy record, so long as the copy that is retained clearly shows all handwritten or other notations.
(2) No. An insurer is not required, in order to comply with records retention requirements, to retain copies of all emails in a correspondence exchange if it retains the final email that includes the full text (including all attachments) of all the prior emails, so long as the that copy that is retained clearly shows all handwritten or other notations, and includes all attachments not otherwise in the policy record.
(3) No. An insurer is not required, in order to comply with records retention requirements, to retain more than a single copy of inspections and agent requests so long as the copy that is retained clearly shows all handwritten or other notations.
(4) Yes. An insurer is required, in order to comply with records retention requirements, to retain all pages of the application for coverage, even those that are unrelated to the coverage being sought, and the copy retained must clearly show all handwritten or other notations.
You report the following facts. In the process of applying for coverage, an insured’s Acord 1 or other form of application is submitted to an insurer with the agent’s email or other correspondence requesting a price quote (and possibly an adjusted price quote), then again with the agent’s request to the insurer for a binder. The signed application and payment are mailed to the insurer, sometimes with copies of previous correspondence or emails and one or more quotes from the insurer. The insurer presently keeps copies of all materials submitted by the agent, even if they duplicate previously received documents.
Emails between the insurer and its agents are set by default to include a copy of all previous emails in the thread or chain and all attachments for those emails. The insurer presently keeps copies of each email and attachment in a thread or chain.
Inspections and agent requests are often submitted to the insurer multiple times. The insurer presently keeps all of the copies.
The insurer presently keeps all pages of each application for coverage, even if a portion of the document does not pertain to the insurer. For example, the insurer presently retains the portions of an application for coverage that reference workers compensation even though it does not write that line of business.
The insurer on whose behalf you inquire is changing its recordkeeping from a largely paper system to one in which it retains scanned copies of its records. Before the insurer completes this task, it wishes to verify with the New York State Insurance Department the records that it must retain.
The Department’s standards for records retention are contained in 11 NYCRR Part 243 (“Regulation 152”). Regulation 152 applies to each “insurer,” defined by Section 243.1(a) to mean:
[An] authorized insurer, as such term is defined in Insurance Law, section 107(a)(10); a joint underwriting association; the State insurance fund; the medical malpractice insurance plan; the New York property insurance underwriting association; the New York automobile insurance plan; the motor vehicle accident indemnification corporation; a health maintenance organization subject to :Public Health Law, article 44; an employee welfare fund; a charitable annuity society, pension fund, retirement system, fraternal benefit society, or other entity exempt from the doing of an insurance business pursuant to Insurance Law, section 1108 or other section of the Insurance Law and which is subject to examination by the superintendent; a viatical settlement company; or a licensed rate service organization.
The “records” that must be retained by the insurer are defined by Section 243.1(b) to include: “books, records, files, securities, data compilations and other documents.” The purpose of the records retention requirements is to ensure that the Department is able to examine the operations of the insurer for proper compliance with statutory and regulatory mandates.
Regulation 152 permits an insurer to retain its records in a durable medium, which includes electronic media. The term “durable medium” is defined in Section 243.1(c) to mean:
[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 generation, 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 243.3(d) further states that nothing in the Part is to be construed as requiring use of any particular method of records retention. A scanned document is a record that constitutes a durable medium.
Section 243.3(a)(3) states that, if a record is transferred to a durable medium, the insurer may destroy the original, provided that:
[A]ll information contained in the original record, including signatures, handwritten notations, or pictures, is contained in the durable medium.
Further, if the original record was not a paper document, Section 243.3(a)(2) of the Regulation states as follows:
. . . [A]n 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.
Finally, an insurer shall establish and maintain a records retention plan that describes the types of records being retained, the method of retention, and the safeguards established to prevent alternation of the records. If the insurer does not retain the original paper record, the insurer must establish a duplicate or back-up system at a separate location that is sufficient to permit reconstruction of the record and the record may be retained in an electronic media. See Section 243.3(a)(4) and (c).
Once the insurer’s records have been scanned in accordance with its records retention plan, Section 243.2(e) provides as follows:
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.
I. Policy Records
You first inquire about retention of records of policy record or claim files. The signed application and the correspondence associated with the process of seeking issuance of a policy or contract, whether or not insurance is issued, are to be included within the policy record. So long as the insurer maintains a single copy of all of the records required to be retained, and that single copy is readily available and accessible to the Superintendent in a readable form, multiple copies need not be retained in the electronic media format chosen by the insurer for retention.
You next ask whether an insurer must retain emails (each of which contains the full text of all previous emails, including all attachments) between itself and an agent. If, before retention in electronic format, the insurer verifies that each record that it proposes to transfer contains the entire email thread or chain (with attachments), it is not necessary to retain as separate records the earlier emails in the thread or chain that are included in full detail in the email that is retained.
III. Other Records
You further ask whether multiple copies of other correspondence and documents, not discussed previously but that fall into the category of records, must be retained in electronic media. As noted above, only one copy needs to be maintained in a durable medium provided that the document is readily available and accessible to the Superintendent in a readable form and clearly shows all handwritten or other notations.
You also ask whether all pages of an Acord or other application for coverage, and related documents, are records that need to be retained, whether in durable medium or otherwise, even if some of the pages are not germane to the specific transaction and are therefore blank.
In this instance, pages not relevant to the insurer are nonetheless part of the record as defined by Section 243.1(c). Accordingly, omission of those pages would result in an incomplete record. Each page, even the pages with no entries, constitutes part of the entire record. If only a part of the agreement and related documents is available to the Superintendent, the Superintendent would be unable to verify and examine the entire history and details of the transaction. Therefore, Regulation 152 does require an insurer to retain all pages of an application for coverage, even if certain of such pages are not relevant to the transaction in question.
For further information, you may contact Associate Tax Counsel Ann H. Logan at the New York City office.
1 “Acord forms” are commercial, largely standardized documents that many insurers and insurance providers use for various insurance or policy purposes, such as applications and evidence of insurance.