Industry Issues | Surplus Lines Reform

New York Surplus Lines Regulatory Update – Electronic Delivery of Insurance Documents

Regulatory Update - New York

The Excess Line Association of New York (ELANY) published Bulletin No. 2018-33 that outlines the position of the New York Department of Financial Services related to the electronic delivery of insurance documents.

It is the position of the New York DFS that a licensed insurance company - or the insurance agent or broker - may electronically transmit an insurance policy to an insured provided that the insured consents and the policy conforms to all the applicable regulatory requirements.

While most statutory requirements contained in the NY Insurance Law may be met in an electronic environment (e-delivery), the ELANY bulletin cautions that certain statutes that include mailing provisions or requirements may present obstacles to electronic commerce. (e.g. statutory cancellation or non-renewal notice requirements).

As it relates to excess line insurance transactions, the DFS has opined the following regarding the use of electronic commerce in excess line transactions:

  • The E&S insurer may electronically transmit insurance policies and documents ONLY to the NY licensed excess line broker.
  • The E&S insurer may not "mail/e-mail" insurance policies and documents from outside the state directly to New York insureds, as this would be viewed as a violation of NYIL Section 2117 and not fit the so called NYIL Section 1101 "mail order exception."
  • Only the excess line broker may transact (including electronically) with the E&S insurer in procuring the insurance coverage. (e.g. the excess line broker may e-mail insured's completed application to the E&S insurer.)
  • The excess line broker may electronically transmit the insurance policy and documents directly to the insured or to the producing broker for delivery to the insured, but only if the insured has consented to engage in an electronic transaction.
  • If the insured does not consent to receiving the insurance policy and documents electronically the excess line broker may charge a fee for providing paper copies. Any fee should be included on the "Total Cost Form".
  • The "Total Cost Form" may be signed using an e-signature but only if the insured consents to engage in an electronic transaction.