NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A2387A Revised 2/23/24
SPONSOR: Dilan 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 OR GENERAL IDEA OF BILL:
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 on
servers that are accessible through the internet, on an internal server
hosted by the insurer or one of its affiliates, or externally with a
third-party service provider if they are easily accessible from the
insurer's principal office in this state.
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 to various
records, including its charter, bylaws, and books of account on servers
that are accessible through the internet, on an internal server hosted
by the insurer or one of its affiliates, or externally with a third-part
service provider if they are easily accessible from the insurer's prin-
cipal office in this state. Currently, the Department of Financial
Services requires domestic insurers, upon examination, to maintain docu-
ments at their principal office. The documents may be maintained in
paper form or keep on a durable medium, such as a floppy disk or flash
drive. This requirement is no longer necessary to ensure proper account-
ability 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 docu-
ments 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can easily be damaged or stolen, has become outdated and is no longer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
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.
The proposed amendments to § 325 come directly from Circular Letter No.9
of 2022 issued by the Department of Financial Services that permits
insurers to store and make accessible to the department statutorily
required records and books of account on information systems in the
cloud, on an internal server hosted by the insurer or one of its affil-
iates, or externally with a third-party service provider.
LEGISLATIVE HISTORY:
2021-2022: A8174 - S4330A
FISCAL IMPLICATIONS:
None
EFFECTIVE DATE:
This act shall take effect immediately.
