Bulletin: PA2025001

Dear Associates:

The proper retention of all documents and records related to any insured transaction is of paramount importance both for compliance with applicable law, as well as for required examinations conducted by the Insurance Department pursuant to Article IX of the Insurance Department Act of 1921 (40 P.S. §§ 323.1-323-8).

Documents and Other Records, Generally:

The minimum standards for the retention of such documents and records can generally be found within Pa. Code - Title 31 Insurance Subpart C, Chapter 37a, which states, as follows:

(a)  A licensee shall establish, maintain, and follow record retention procedures to retain all documents pertaining to the licensee’s transaction of the business of insurance for 7 years from the final execution or creation of the record, whichever is longer.

(b)  This section establishes only the minimum retention period and shall not affect any record retention requirements that may be in excess of this time period, including requirements imposed by any of the following:

     (i)   A contractual agreement.

     (ii)   The Internal Revenue Service.

     (iii)   An applicable statute of limitations.

     (iv)   A law, regulation or policy of the department or any other state or Federal regulatory agency.

(c)  Nothing in this section prohibits a licensee from retaining a record in an electronic format, provided that all records shall be retained in a manner that preserves their authenticity and will allow for their prompt production upon request by the department or any other state or Federal regulatory agency.

(d)  For purposes of this section, an employee, agent, representative or designee of an insurance producer that is a business entity is exempt from the requirement to individually retain records to the extent that these records are already maintained by the licensed business entity.

(31 Pa. Code §37a.25 Recordkeeping, emphasis added).

As indicated within subsection (c), above, records may be retained in an electronic paperless format that properly preserves the integrity and accuracy of the information to be preserved and has the capability to reproduce those records in hard copy form or other medium acceptable to the Department that is as legible as the original, including signatures, notations and approvals.

Recordkeeping systems, of whatever nature, must further include safeguards that provide assurances against tampering, alteration, or degradation of those records.

(See also: Guidelines for Retention of Records by Insurers and Other Entities Subject to Examinations Conducted by the Insurance Department; Notice No. 2011-10; 41 Pa. B. 5849, Saturday, October 29, 2011).

Examples of relevant documents to be retained include, but are not limited to, all applicable closing documents, statements, bank reconciliations, escrow and financial records, policies, affidavits, tax certifications, claims matters, consumer complaints and more.

Retention Requirements for Abstracts of Title/Commitment/Title Evidence:

As indicated within subsection (b), above the 7-year retention period represents the minimum timeframe for which documents related to the insured transaction are required to be retained, unless otherwise required through a contractual obligation that necessitates a longer period or by “a law, regulation or policy of the department or any other state or Federal regulatory agency.”

As it happens, the abstract of title utilized as the basis to insure any transaction falls into that latter category, pursuant to Title 40 P.S. Insurance:

“The abstract of title or the report of the examination thereof shall be in writing and shall be kept on file by the title insurance company or its agent or approved attorney for a period of not less than twenty years after the policy of title insurance has been issued.”

(Title 40 P.S. Insurance § 910-7, emphasis added).

Lastly, please also be advised that every agent of a title insurance company shall keep his, her or its books, records, accounts and vouchers pertaining to the business of title insurance, in such manner that the commissioner or his authorized representatives may readily ascertain from time to time, whether or not the agent has complied with all of the applicable provisions of this act. Failure to comply with this section shall be grounds for the revocation of the agent's license.

(40 P.S. Insurance § 910-27. Agents; books, records, etc.…)

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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