NU Online News Service, March 22, 11:45 a.m.EDT

The Independent Insurance Agents & Brokers of New York andthe Council of Insurance Brokers of Greater New York say they willnot appeal the decision of a state appeals court that upholds stateregulations governing disclosure of producer compensation.

“We did all that we could to fight this misguided regulation,”says IIABNY Chairman Christopher A. Brassard. “The board hasconcluded that the likelihood of the New York Court of Appealsoverturning the decisions of the two lower courts is small.”

On March 8, the Appellate Division of the Supreme Court of NewYork upheld a lower-court decision supporting Regulation 194(Producer Compensation Transparency), which requires producers tosupply clients with information about their compensation and givedetails about that compensation, including contingent commissions,if requested.

The two associations sued the insurance department, now the NewYork Department of Financial Services, shortly after the regulationwas implemented in 2010.

The associations argued Regulation 194 is a burden because ofits recordkeeping requirements and contended that the departmentdid not have the authority to regulate disclosure of compensation.They also said the regulation has little benefit for consumers.

The courts disagreed and upheld the regulation.

Further appeal, says IIABNY, was considered too costly andfutile.

“The board looked at the projected cost in terms of time andresources that an appeal would entail,” Brassard says, “andcompared that to the probability that the court would rule in ourfavor. After a thorough discussion, the board concluded that itwould not be in the members' best interest to continue.”

He adds, “Our opinion of Regulation 194 is unchanged. We supporttransparency and disclosure when the client wants it, but thisregulation is burdensome and unnecessary.”

The association is at odds with the Risk and InsuranceManagement Society, which has applauded the ruling.

The issue of greater disclosure sprang from the 2004investigation by then-Attorney General Eliot Spitzer that allegedinsurance brokers were engaged in a kickback scheme involving thesteering of insurance contracts to certain insurers in return forlucrative contingent commissions.

For a time, four of the largest insurance brokers in the UnitedStates agreed to no longer accept contingent commissions to avoidfurther action from state attorneys general.

Those bans were lifted in 2010.