New York DFS Broadens the Permissible Use of Electronic Communication for Property/Casualty Insurance Notices

On December 22, 2021, Gov. Kathy Hochul signed Senate Bill S653A, relating to electronic delivery of property/casualty insurance notices. This bill amends the New York Insurance Law by adding section 3458, which takes effect on the 90th day after becoming law (March 22, 2022).

As enacted, section 3458 pertains only to property/casualty insurance notices, having no effect on other lines of insurance. It takes a sweeping approach to allowing electronic communication of insurance notices, which contrasts with the current piecemeal of statutes, regulations and administrative guidance currently governing this area. Before section 3458, the New York State Department of Financial Services (NYDFS) allowed notice to consumers via electronic communication where the consumer gave affirmative consent and where the governing statute or regulation did not state the notice must be provided in manner that specifically excluded electronic communication (e.g., requiring notice by first class mail; first class mail, postage prepaid; certified mail; certificate of mail; certificate of mailing).

Section 3458 excludes the above noted exception, allowing all property/casualty insurance notices to be delivered through electronic communication so long as the consumer has consented affirmatively to such electronic communication and the requirements set forth in the bill are satisfied.

Section 3458 maintains consumer safeguards despite its broad scope, including:

• Required consumer consent to receive electronic communications (and clear notice of rights before consent is given).
• Options to withdraw consent.
• Required notice of software and hardware requirements to receive electronic notices.
• Requirements to deliver by alternative means if electronic delivery fails.

Other states have enacted similar laws, and activity in this area is expected to continue for various reasons, including environmental concerns with sending paper communications and COVID-19 restrictions encouraging online interactions. Some states, such as Minnesota and Washington, were earlier movers on this issue, with Minnesota updating its law in 2013 and Washington updating its law in 2015. Further, unlike New York, the laws in both Minnesota and Washington (as well as some others) apply generally to insurance and are not limited to property and casualty insurance.

Insurers and other affected entities should continue to watch for continued movement in this area, both in other states who have not yet enacted broad electronic delivery laws or whose insurance notice electronic delivery laws are narrow in scope, and also in New York, where we may see similar legislation proposed for other lines of insurance.