NU Online News Service, March 24, 3:22 p.m.EDT

The Professional Insurance Agents of New York (PIANY) said itwill not join a lawsuit challenging the legality of the New YorkState Insurance Department's producer compensation disclosureregulation.

The Independent Insurance Agents and Brokers of New York(IIABNY) has promised to bring an action. It first threatened tobring the lawsuit challenging the regulation in December 09. IIABNYreiterated its intention to bring the Article 78 action in Februarywhen the department officially released its new rules.

Under the new regulations, producers will be required todescribe to consumers their role in the transaction and how theyget paid. If the client requests it, the agent or broker will haveto provide a more detailed statement about compensation.

IIABNY claims the new rules place an undue burden upon agentsfor no justifiable reason and is questioning whether the departmenthas the authority to promulgate the regulation.

PIANY President Kevin M. Ryan, in a letter to the association'sagent members, said PIANY and other trade groups were invited toparticipate in the IIABNY lawsuit. "Certainly, since this optionappears quite popular among some of our members, it would have been'safe' for us to simply join the suit," he wrote.

But he stated that the association will not join, choosinginstead to represent agent/broker interests in further discussionswith the department.

Mr. Ryan said the department "has made it absolutely clear thatany group or individuals who participate in an Article 78 in regardto this regulation will not be engaged in any discussions regardingthe development of compliance guidelines and the Circular Letterdetails, which will be critical if the legal action fails."

He added that he sees the value in IIABNY filing the suit, andhe added he views the divergent paths of the two agent groups asessentially a two-pronged approach with the same end goal–one grouppursuing action through the courts and the other pursuing changesthrough discussions with the department.

"It is in the best interest of our member agents and brokers toretain our seat at that table lest nobody represent producerinterests in what may well be an extremely important conclusion toyears of work," said Mr. Ryan.

Stating that PIANY joining the suit would not improve itschances of success, Mr. Ryan said the court "will rule on thesoundness of the argument; not the number of groups making theargument."

He further stated that PIANY consulted four attorneys who haveexperience with Article 78 actions and with the InsuranceDepartment, and Mr. Ryan said that "none of those with whom weconsulted were overly optimistic that the suit will prevail."

IIABNY President and Chief Executive Officer Dick Poppa saidIIABNY still plans to move forward with the lawsuit, and dismissedthe notion that the action may not succeed. "When our board madeits decision to move forward, it was certainly aware of the odds ofprevailing," he said. "But with that, our board felt like it wasthe right thing to do."

He also said he does not believe that the lawsuit will precludeIIABNY from continuing discussions with the department. "We don'taccept premise that we won't be at the table," he said.

For its part, the department said it would be "very difficult"to have open discussions about the regulation with an entity thatis party to a lawsuit against it.

Department spokesman Andy Mais said, "It is unfortunate thatsome have chosen to take this route."