BILL NUMBER: S4674

SPONSOR: JACKSON
 
TITLE OF BILL:

An act to amend the insurance law, in relation to allowing domestic
insurers to make certain records available by electronic means

 
PURPOSE:

To modernize the statutory record keeping requirements of the insurance
law.

 
SUMMARY OF PROVISIONS:

Section 1. Subsection (a) of section 325 of the insurance law is amended
to authorize domestic insurers to meet their legal obligation to main-
tain a variety of statutorily required records and books of account
through electronic means that provides equivalent access to the Super-
intendent of Financial Services.

Section 2. Effective Date
              

 
JUSTIFICATION:

This bill would modernize the record keeping requirements mandated by
325 of the Insurance Law. The bill authorizes domestic insurers to
provide the Department of Financial Services with access, "through elec-
tronic means", to various records, including its charter, by-laws, and
books of account, that current law requires insurers to keep and main-
tain in their principal office in the state.

Currently, the Department of Financial Services requires domestic insur-
ers, upon examination, to maintain documents at their principal office;
The documents may be maintained in paper form or keep on a durable medi-
um, such as a floppy disk or flash drive.

This requirement is no longer necessary to ensure proper accountability
and transparency, and the proposed amendment seeks to maintain both. The
bill does not change in any way the legal requirement that insurers
maintain certain records. The bill does not change what documents must
be maintained and it does not change the timeline by which they must be
provided to the Department. It only changes the means by which insurers
are authorized to keep and maintain the records.

The practice of maintaining documents in a physical location, where they
can easily be damaged or stolen, has become outdated and is no longer
the most secure means by which documents can be safeguarded.  Electronic
storage on servers, or in cloud-based platforms, has significantly
increased the security of stored documents. The internet has provided a
means by which these documents may be transmitted to the Department of
Financial Services that is remarkedly more efficient. The Department has
recognized the value of providing documents electronically, and often
times requires insurers to file or transmit documents and reports by
email or through web portals.

This statutory change will allow domestic insurers and the Department of
Financial Services to be more efficient and in line with the current
state of technology.
 
LEGISLATIVE HISTORY:

2023-2024 - S2801 - Referred to Insurance

2021-2022 - S4330A- Referred to Insurance

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately.