Electronic Delivery, Notices. and Electronic Funds Transfers

Hugh McDonald SECRETARY OF COMMERCE AID 1111*=,"" * BULLETIN NO. 9-2023 DATE: TO: FROM: SUBJECT: MAY 2, 2023 Alan McClain COMMISSIONER, ARKANSAS INSURANCE DEPARTMENT ALL LICENSED AND SURPLUS LINES PROPERTY AND CASUALTY INSURERS ARKANSAS INSURANCE DEPARTMENT ELECTRONIC DELIVERY, NOTICES, AND ELECTRONIC FUNDS TRANSFERS The Arkansas Insurance Commissioner ("Commissioner") issues this bulletin in response to inquiries related to various electronic transactions by property and casualty insurers with insureds. The inquiries pertain to whether a property and casualty insurer may electronically deliver policies to its insureds and whether claims payments are permitted to be made to insureds electronically, through electronic funds transfers ("EFTs") or direct deposit. This bulletin or guidance only applies to the property and casualty lines of insurance. The Commissioner may later issue a similar bulletin regarding electronic deliveries and transactions in health and life insurance lines. For delivery of policies and other notices as addressed in this bulletin (with some limitations addressed herein), the Arkansas Insurance Department ("AID") shall follow the Arkansas' Uniform Electronic Transactions Act ("UETA"), codified at Ark. Code Ann. Section 25-32-101 et seq. The Commissioner interprets Ark. Code Ann. Section 25-32-105 to permit an insurer and insured to agree to conduct transactions by electronic means if both parties consent. The consent may be obtained through electronic means, as well. Therefore, if the insured consents to an electronic delivery of the policy with the insurer, the Commissioner maintains that this is permissible "delivery" of the policy under any Arkansas Insurance Code or AID Rule(s). This standard is also applicable to other notices required to be provided to the insured "in writing," as necessitated by the Arkansas Insurance Code or AID rules. However, due to the gravity and importance of the following notices, at this time, the following notices need to be continued to be physically mailed to the insured: (1) claims denials; (2) notices of nonrenewal; and (3) notices of cancellation. To comport with modern practices or standards already apparently ongoing in the industry, the Commissioner also interprets that electronic fund transfers and direct deposits to insureds for payment of claims are permitted under AID Rule 43(9)(F) as valid payment of claims. The Commissioner intends to amend and modernize AID Rule 43 in the ongoing months, to make various changes to that Rule, including recognition of EFTS for claims, but in the meantime, property and casualty insurers are permitted to pay claims to insureds through EFTs or direct deposit. Arkansas Department of Commerce Arkansas Insurance Department 1 Commerce Way, Suite 102 • Little Rock, AR 72202 INSURANCE.ARKANSAS.GOV For questions related to this bulletin, please contact Booth Rand, General Counsel, at (501) 371-2827. A ISSUED this day of May 2023. Alan McClain INSURANCE COMMISSIONER