The Office of General Counsel issued the following opinion on July 6, 2004, representing the position of the New York State Insurance Department.
RE: Delivery of Group or Blanket Accident and Health Certificates Via Electronic Transmission
May an authorized accident and health insurer deliver by electronic transmission (i.e., as an attachment to e-mail) the certificate described in N.Y. Ins. Law § 3221(a)(6) (McKinney Supp. 2004) to the employer or person in whose name a group or blanket accident and health insurance policy has been issued?
An authorized accident and health insurer may deliver by electronic transmission (i.e., as an attachment to e-mail) the certificate described in N.Y. Ins. Law § 3221(a)(6) (McKinney Supp. 2004), which has been approved by the Department pursuant to N.Y. Ins. Law § 3201 (McKinney Supp. 2004), to the employer or person in whose name a group or blanket accident and health insurance policy has been issued where such employer or person has consented to delivery by electronic transmission.
A representative of a company that is in the business of providing secured electronic document delivery stated that health insurers have expressed an interest in using this companys services to deliver "certificates of coverage," which were described as "standardized documents [that] explain what the insurance coverage entails."
Based on the description provided of a "certificate of coverage," we assume that the company representative was referring to a certificate as described in N.Y. Ins. Law § 3221(a)(6) (McKinney Supp. 2004), which must be approved by the Department before it is delivered or issued for delivery pursuant to N.Y. Ins. Law § 3201 (McKinney Supp. 2004). N.Y. Ins. Law § 3221, which is entitled: "Group or blanket accident and health insurance policies; standard provisions," states in relevant part:
(a) No policy of group or blanket accident and health insurance shall, except as provided in subsection (d) hereof, be delivered or issued for delivery in this state unless it contains in substance the following provisions. . . :
* * * *
(6) That the insurer shall issue either to the employer or person in whose name such policy is issued, for delivery to each member of the insured group, a certificate setting forth in summary form a statement of the essential features of the insurance coverage and in substance the following provisions of this subsection.
Thus, N.Y. Ins. Law § 3221 requires an insurer of a group or blanket accident and health insurance policy to provide a certificate to the policyholder for distribution to each insured member of the group. The certificate describes the essential features of the coverage provided and the required statutory provisions.
The Department interprets statutes that provide for "delivery" to permit electronic communications,1 in recognition of the authority established under the Electronic Signatures and Records Act ("ESRA"), N.Y. State Tech. Law Art. 1 (McKinney 2003) and the federal Electronic Signatures in Global and National Commerce Act ("E-SIGN"), 15 U.S.C. §§ 7001 7031.
ESRA creates a statutory structure in New York State that supports the use of electronic records in everyday public and business undertakings. N.Y. State Tech. Law § 102(2) states:
"Electronic record" shall mean information, evidencing any act, transaction, occurrence, event, or other activity, produced or stored by electronic means and capable of being accurately reproduced in forms perceptible by human sensory capabilities.
N.Y. State Tech. Law § 105(3) states that electronic records "shall have the same force and effect as those records not produced by electronic means." Thus, an electronic record has the same legal effect as one that is written.
E-SIGN, the federal Act, provides that electronic records may not be denied legal validity simply because they are made electronically. E-SIGN preempts inconsistent state laws, other than state statutes patterned after the Uniform Electronic Transactions Act ("UETA"). 15 U.S.C. § 7001(a) states in relevant part:
(a) Notwithstanding any statute, regulation, or other rule of law . . . with respect to any transaction in or affecting interstate or foreign commerce
(1) a signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form; and
(2) a contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation.
Under E-SIGN, electronic documents are given the same force in law as paper signatures and documents.
Under both ESRA and E-SIGN consumers must consent to doing business electronically.2 Therefore, the accident and health insurers who propose electronic delivery (i.e., as an attachment to e-mail) of the N.Y. Ins. Law § 3221(a)(6) certificates to their policyholders must obtain the consent of their policyholders to make delivery in this manner.
For further information you may contact Associate Attorney Sally Geisel at the New York City Office.
1 In Circular Letter No. 33 (1999), the Department advises that certain insurance transactions may be done electronically, as most existing provisions of the New York Insurance Law will not hinder such transactions. The Department interprets statutes that use words such as "writing" or "certificate" to allow electronic documents. Furthermore, Circular Letter No. 33 states that electronic communications are permitted where statutes provide for "delivery". See also Supp. No. 1 to Cir. Letter No. 33 (09/03/2002).
2 N.Y. State Tech. Law § 109 ,15 U.S.C. §7001(c).