OGC Opinion No. 06-11-17
The Office of General Counsel issued the following opinion on November 17, 2006 representing the position of the New York State Insurance Department.
Re: Permissibility of Insurer Sending Claim Acknowledgment Notice Electronically
Question Presented:
May an insurer send a claim acknowledgment notice electronically, such as by e-mail?
Conclusion:
Yes. Electronic claim acknowledgment notices are permitted provided that the recipients of the notices have affirmatively and voluntarily consented to such procedure.
Facts:
No specific facts were provided.
Analysis:
The use of electronic communications in insurance-related undertakings, such as claim acknowledgment notices, is generally permitted pursuant to the Electronic Signatures and Records Act ("ESRA"), N.Y. State Tech. Law Art. 1 (McKinney 2003) and the federal Electronic Signatures in Global and National Commerce Act ("E-SIGN"), 15 U.S.C. §§ 7001 - 7031.
ESRA in New York permits the use of electronic records in everyday public and business dealings. N.Y. State Tech. Law § 102(2) states:
"Electronic record" shall mean 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.
Furthermore, N.Y. State Tech. Law § 105(3) states that electronic records "shall have the same force and effect as those records not produced by electronic means."
In addition, the federal E-SIGN Act provides that electronic records may not be denied legal validity simply because they are made electronically. E-SIGN preempts inconsistent state laws. 15 U.S.C. § 7001(a) states in pertinent part:
(a) Notwithstanding any statute, regulation, or other rule of law . . . with respect to any transaction in or affecting interstate or foreign commerce -
(1) a signature, contract, or other record relating to such transaction may not be denied legal
effect, validity, or enforceability solely because it is in electronic form; and
(2) a contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation.
Thus, under E-SIGN, electronic documents are given the same force in law as non-electronic documents.1
It should be noted, however, that under both ESRA and E-SIGN2, consumers must first consent to doing business electronically. New York State Technology Law § 309 (McKinney 2005 Supplement) provides:
Nothing in this article shall require any entity or person to use an electronic record or an electronic signature unless otherwise provided by law.
Section 216.4 of N.Y. Comp. Codes R. & Regs. tit.11, Pt. 216 (Reg. 64) (1984) provides, in pertinent part, as follows:
(a) Every insurer, upon notification of a claim, shall, within 15 business days, acknowledge the receipt of such notice. Such acknowledgment may be in writing. If an acknowledgment is made by other means, an appropriate notation shall be made in the claim file of the insurer . (emphasis added).
In Circular Letter No. 33 (1999), the Department opined, in pertinent part, as follows: "Statutes that utilize the words "writing", "certificate", or "memorandum", or the like, permit electronic documents...Statutes that provide for "delivery", "notice", or the like, permit electronic communications."
Therefore, acknowledgment of a claim by an insurer may be sent electronically (including e-mail) provided that the recipient has affirmatively and voluntarily consented to such procedure.
For further information you may contact Principal Attorney Paul Zuckerman at the New York City office.
1 E-SIGN is applicable to insurance transactions, as 29 U.S.C.A. § 7001 provides: "(a) In general. Notwithstanding any statute, regulation, or other rule of law. . . with respect to any transaction in or affecting interstate or foreign commerce--(1) a signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form; and (2) a contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation". (i) Insurance. It is the specific intent of the Congress that this title . . . apply to the business of insurance."
2 15 U.S.C.A. § 7001(c)(1).