OGC Opinion No. 07-08-17

The Office of General Counsel issued the following opinion on August 31, 2007 representing the position of the New York State Insurance Department.

RE: Electronic distribution by insurers of insurance policies, forms, and bills to insureds

Question Presented:

May an insurer give its insureds the option of receiving their insurance policies, applicable forms, and premium bills electronically, via e-mail, instead of by hard copy sent through the mail?

Conclusions:

Yes. An insurer may provide its insureds with the option of receiving their insurance policies, applicable forms, and premium bills electronically, via e-mail, instead of by hard copy sent through the mail. There is nothing in either the Insurance Law or regulations promulgated thereunder that prohibit such transmissions, provided that the insured consents to such receipt.

Facts:

Your inquiry is of a general nature, without reference to particular facts.

Analysis:

You ask whether an insurer may give its insureds the option of receiving their insurance policies, applicable forms, and premium bills electronically, via e-mail, instead of by hard copy sent through the mail.

The Department has interpreted statutes that provide for delivery of insurance documents to permit delivery by electronic means. See Electronic Signatures and Records Act ("ESRA"), N.Y. State Tech. Law, Art. 4 (McKinney Supp. 2005 and Ch. 741 L. 2005, § 7) and the federal Electronic Signatures in Global and National Commerce Act ("E‑SIGN"), 15 U.S.C.A. §§ 7001-7031 (West Supp. 2003). These statutes establish a legal framework for the conduct of electronic commerce. Indeed, in Circular Letter No. 33 (1999), the Department advised that certain insurance transactions may be done electronically, as most existing provisions of the New York Insurance Law will not hinder such transactions.

The Department has consistently encouraged the use of electronic transactions in insurance where there is consent on the part of the insured to enter into an electronic transaction, except to the extent that statutory requirements cannot be satisfied by an electronic transmittal. Although the Department has not previously addressed the practice of electronic billing, nothing in either the Insurance Law or regulations promulgated thereunder precludes such transactions.

Formatting requirements prescribed by the New York Insurance Law, such as font size, type, style, clarity, prominence, attachments, placement and color, 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 the Insurance Law's formatting requirements.

Please note that notwithstanding the Department’s encouragement of electronic commerce, some insurance transactions must be completed in person. For example, the New York State Automobile Insurance Plan (“Plan”) requires that, in all instances, an insurance producer must meet in person with the individual to whom an insurance policy is being sold. Section 15(A)(1)(c) of the rules of the Plan states in pertinent part:

For further information you may contact Supervising Attorney Barbara Kluger at the New York City Office.