Current Guidance Regarding Electronic Signatures, Transactions, and Filings with DFS

The Department of Financial Services (“Department”) has recently received inquiries from its regulated insurance persons and entities regarding the use of electronic signatures and records during the current state of emergency due to the novel coronavirus COVID-19.

It has been the Department’s longstanding position that the use and acceptance of electronic signatures and records in New York is permissible.  See, for example, Insurance Circular Letter No. 33 (1999).

Particularly at this time, in instances that cause no consumer harm, the Department encourages the insurance industry to use and accept electronic signatures and records to facilitate insurance transactions and minimize disruptions, as described in further detail below.  However, this guidance does not negate prior approval requirements for policy forms and other communications in the Insurance Law or regulations promulgated thereunder.

Required Consent to E-Transaction. New York’s Electronic Signatures and Records Act (New York State Technology Law Article 3) and the federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. § 7001 et. seq.) permit the insurance industry to use and accept electronic signatures and records if the consumer with which an individual or entity is doing business consents to engage in an electronic transaction. 

An electronic signature is “an electronic sound, symbol, or process, attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the record. An electronic signature is considered to be ‘attached to or logically associated with an electronic record’ if the electronic signature is linked to the record during transmission and storage.”  See State Technology Law § 302(3) and 9 NYCRR § 540.4(b).  An electronic record is “information, evidencing any act, transaction, occurrence, event, or other activity, produced or stored by electronic means and capable of being accurately reproduced in forms perceptible by human sensory capabilities.”  State Technology Law § 302(2).

The Department does not require that the insurance industry obtain consent from a consumer in a particular way.  A consumer may consent to engaging in electronic transactions by sending an email to the regulated insurance person or entity affirmatively stating such, for example.  Regardless of how consent is obtained, the insurance industry must maintain proof that a consumer has affirmatively consented to engaging in electronic transactions.

Illustrative Examples. Most of the provisions set forth in the New York State Insurance Law and regulations promulgated thereunder do not pose any impediment to using electronic signatures or records.  Some illustrative examples are:

(a) provisions that use the words “writing,” “certificate,” or “memorandum” permit electronic documents;

(b) provisions that require that a document be “signed” permit electronic signatures; and

(c) provisions that provide for “delivery” or “notice” permit electronic communications. 

Formatting requirements prescribed by statute, including pagination, type size, print color, or that certain language be conspicuous or be placed in a certain location within a document, may be met electronically if the sender and recipient of the electronic document utilize a computer technology that ensures the creation, transmission, and receipt of a document equivalent to that prescribed by statutory formatting requirements.

There are certain provisions that contain additional requirements that may need to be considered, such as provisions that require the use of a “seal” with a writing or the use of United States mail or provisions that require notices to be sent to the address shown in the insurance policy or contract.  In most cases there is no impediment to the use and acceptance of electronic signatures and records, however, and the Department encourages the insurance industry to use and accept them during this declared state of emergency.

Significantly, Governor Cuomo’s Executive Order No. 202.7 on March 19, 2020 provided virtual notarization procedures for documents that are required to be notarized.

Power of Attorney Required to Sign on Behalf of a Consumer. No one may enter a signature, electronic or otherwise, on behalf of a consumer unless the person has a valid power of attorney that complies with General Obligations Law § 5-1501B.  While an individual who legally represents a consumer with such valid power of attorney may sign on behalf of a consumer, an insurance agent, bail agent, title agent, and independent adjuster may not because they legally represent the insurer, nor may a public adjuster do so.

Delivery of Hard Copies or Originals. Regulated insurance persons and entities already file and submit the vast majority of documents with the Department electronically.  For the minimal exceptions for which the submission of hard copies or originals to the Department is required by the Insurance Law or regulations promulgated thereunder, during the current state of emergency, the Department is accommodating its regulated insurance persons and entities by allowing such filings and submissions to be made electronically, with the originals to follow.  The Department will consider electronic submissions made by an applicable deadline to be timely, even if the hard copies or originals follow after such deadline.

Finally, for any submissions by regulated insurance persons or entities that the Department traditionally requires to be in hard copy to facilitate and expedite review, when the person or entity also must make the submission electronically, such hard copy requirement is waived during the current state of emergency, but a hard copy must be submitted to the Department promptly after the declared state of emergency ends.