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Clarifies Department’s Regulation of E-Commerce Insurance Transactions

In response to the expansion of electronic commerce in the financial services industry, Superintendent of Insurance Neil D. Levin today announced guidelines for insurers engaging in online insurance sales transactions and in the online marketing of insurance products in New York State.

"Consumer empowerment is one of the hallmarks of the Internet," said Levin. "The New York State Insurance Department is taking the lead in providing clear guidelines to ensure that while fostering the development of e-commerce we are protecting consumers who engage in paperless insurance transactions."

Governor Pataki paved the way for both insurers and consumers to take full advantage of the Internet when he signed New York’s Electronic Signatures and Records Act into law in September. This Act provides for the use of electronic signatures and records, and encourages the growth of online transactions in New York State. With the new law, certain insurance transactions may be conducted entirely through electronic means. The Department’s guidelines will facilitate the use of e-commerce and will lead the way for discussions between the industry and the Department regarding the marketing and sale of insurance online. The provisions of the Electronic Signatures and Records Act will become effective on March 26, 2000.

While providing guidance, the Department reminds insurers in the Circular Letter to refer to the state’s existing laws and regulations for paper-based transactions when engaging in online transactions. However, the Department provides important guidance by stating that the following existing laws can be interpreted to operate in an electronic commerce environment:

  • Statutes that utilize the words "writing," "certificate," or "memorandum," or the like, permit electronic documents;
  • Statutes that require that a document be "signed" permit electronic signatures;
  • Statutes that provide for "delivery," "notice," or the like, permit electronic communications, including electronic transmission of applications, policy forms, contracts, and premiums.
  • Regulation 152 (11 NYCRR 243), governing records retention by insurers and certain other entities, is not affected by the Act and continues to be applicable; and
  • 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.

The Department’s new guidelines will ensure that New York State is prepared to face the technology challenges of the 21st century and that consumers will be protected as the e-commerce marketplace continues to expand.

Department of Financial Services


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