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Insurers and insurance agencies considering “going green” and becoming paperless should understand New York State Insurance Laws and Regulations and the Insurance Department’s position regarding record retention in electronic media.

The “Standards of Records Retention by Insurance Companies” are set forth in Regulation 152. These standards apply with equal force to insurance agents where the agent is maintaining records on an insurer’s behalf, Under Regulation 152, the term “Records “ is defined as “….books, records, files, securities, data compilations and other documents.” Records are to be maintained in a “durable medium,” which expressly includes “electronic media.” A scanned document, for instance, is a durable medium.

On September 30, 2010, the Office of General Counsel issued Opinion No. 10- 09-15, addressing electronic record retention requirements.

The Department explained that an insurer (or where applicable,, an insurance agent) is required to retain all pages of the application for coverage and the correspondence in connection with seeking insurance coverage, even those that are unrelated to the coverage being sought and irrespective of whether or not insurance is obtained.

Where, however, there is more than one copy of such application or other policy record, the insurer is only required to retain one copy of each document. Likewise, duplicate emails are not necessary to be retained, where the email chain reflects the prior communications. The one copy retained must contain all of the information reflected in the original record, “including signatures, handwritten notations, or pictures.”

The Department previously opined that “Once the paper documents have been properly converted to a durable medium such as an electronic format, then the Insurance Law has no requirement to retain the paper documents.” See OGC Op. No. 03-06-25 (June 26, 2003). Indeed, Regulation 152 expressly recognizes that “Upon transfer of an original record to a durable medium, the insurer may destroy the original record after assuring that all information contained in the original record is contained in the durable medium.” When going paperless, licensees must also be mindful of Regulation 173. Among other things, Regulation 173 requires licensees to implement a comprehensive written information security program to ensure the security and confidentiality of customer information.

In sum, the Department encourages the use of electronic transactions and allows electronic record keeping so long as all the original information from the original record, such as handwritten notes, are retained in the electronic record and that proper security systems are in place. Licensees are not required to maintain two sets of documents in two media.