Final answer:
Insurance transaction records should be retained for at least five to seven years, with variation depending on jurisdiction and type of insurance. HIPPA may influence retention periods for health insurance records due to privacy laws. Retention is important to ensure coverage for claims, operational costs, and company profits.
Step-by-step explanation:
The duration for retaining records relating to an insurance transaction varies by jurisdiction, but a common rule is that these records should be kept for a minimum period following the completion of the transaction or until claims that could arise from the transaction are fully resolved.
This is crucial because one of the fundamental laws of insurance is that the average person's payments into insurance over time must cover the average person's claims, the costs of running the company, and leave room for the firm's profits.
Legal requirements like those of the Health Insurance Portability and Accountability Act (HIPPA) can influence the retention period, particularly for health insurance-related records, by setting strict confidentiality and privacy standards.
Generally, it is recommended to retain insurance records for at least five to seven years, acknowledging that some types of insurance records might need to be kept longer based on legal requirements, claims activity, and other factors inherent to specific insurance contracts.