Relates to electronic delivery of property/casualty insurance notices and posting property/casualty insurance policies on the internet

Section 2 adds new section 3456 to the Insurance Law. Section 3456 permits a property/casualty insurance company to elect to post state-approved insurance policies and endorsements on the company's website. Policyholders would be able to request a free paper copy of the insurance policy.

Section 3 is the effective date.

Justification

Section 1: There has been an increasing trend in today's technologically advanced society toward communicating electronically. Insurance companies would like to provide the option to their customers of receiving notices and documents electronically. Currently, the Department of Financial Services has advised that the use of electronic communications in insurance related transaction is generally permitted, as long consumers have consented to doing business electronically. However, there is a significant exception to this allowance. Electronic delivery of notices is not allowed if a statute or regulation specifically provides for a document or notice to be "mailed." There are several statutes and regulations that still reference delivery by "mail".

This bill would allow all insurance notices and document to be delivered electronically as long as the consumer affirmatively consents to receiving such notices and documents electronically. The bill includes several safeguards designed to protect the consumer. This includes requiring insurers to provide consumers with a clear notice of their rights before consent is given. Consumers would have the right to withdraw consent at any time. Before giving consent the consumer must be provided with the hardware and software requirements to receive documents electronically. Also, the consumer must consent electronically in a manner that demonstrates that they can access the information in the electronic form that will be used for electronic document delivery. In the event the insurer makes hardware of software change, they must notify the consumer. Any time an insurer has reason to believe the electronic transmission has failed to reach the consumer, they must deliver the notice or document by another delivery method.

Section 2: Each year property and casualty insurance companies print and then mail millions of policy contract booklets to their customers. Often, these policies can exceed fifty pages in length. Surveys suggest consumers often toss their policies into the recycle bins without ever reading them. While e-commerce laws have helped to eliminate some of the waste, the process still has serious limitations. This legislation would allow the posting of standard approved insurance policies and endorsements on the insurance company's website, provided that the policy remains accessible for as long as the policy is in force. Expired policies and endorsements would be required to be available for five years, and upon request after that.

The policies and endorsements must be posted in a manner that enables the policyholder to print and save the policy and endorsements using programs or applications widely available on the internet and free to use. The insurance company is required to provide with each declaration page a description of the exact policy and endorsement forms purchased by the insured, a description of the policyholder's right to receive upon request and without charge, a paper copy of the policy and endorsements by mail and the internet address where their policy and endorsements are posted.

Personal identifying information would not be posted. This legislation applies to insurance policy and endorsements as approved by the Department of Financial Services.

The benefits to the insurance consumer are many. First, for the prospective insurance buyer, he or she can look at the approved policies and better compare the provisions of competitors. Second, this legislation is environmentally friendly; it reduces unnecessary and unwanted mailings. Third, there are no privacy concerns, as policy contracts and endorsements do not contain any personal identifying information. Fourth, electronic policy contracts create additional features that are not possible with paper contracts, for example, companies could augment the policies with FAQs, annotations, chat functionality for answering questions and other content to help consumers better understand their policies. Enabling laws have been approved in at least thirteen other states.

Legislative history

S.5249 (amended) passed 2015

Fiscal implications

None.

Effective date

This act shall take effect on the ninetieth day after it shall have become law.