NU Online News Service, Dec. 23, 11:40 a.m. EDT

Two New York independent agent associations said they will appeal a lower court's ruling that allowed the State Insurance Department's new commission disclosure regulation to take effect Jan. 1.

In a statement released late yesterday, the Independent Insurance Agents & Brokers of New York and the Council of Insurance Brokers of Greater New York said the associations took the first step in appealing a New York State Supreme Court decision, filing a notice of appeal to the New York Supreme Court Appellate Division, Third Department in Albany, N.Y.

"Our action today preserves our right to make a formal appeal at a future date," noted IIABNY Chairman David M. Gelia. "We will spend the next several months building the strongest possible case we can make to the appellate court."

The dispute concerns the New York State Insurance Department Regulation 194 that takes effect Jan. 1.

The regulation requires agents and brokers to tell clients how insurance companies pay them, whether or not the clients have requested the information. Should a client have questions about the producer's compensation, the producer must provide additional information including details about the policy sold and policies the client rejected.

IIABNY contends that under terms of the disclose agents would have to disclose:

Differences in types and amounts of coverage.
Contrasts in policy terms.
The pay that would have been received had the client chosen a different policy.

The two associations argued that New York State insurance law does not give the Insurance Department the power to make these demands. They also said the regulation is arbitrary and imposes large, needless compliance costs on producers.

On Nov. 19, Acting Supreme Court Justice Richard M. Platkin rejected the association's claims.

"We do not agree with the state Supreme Court's ruling," Mr. Gelia said. "Regulation 194 is a costly demand on law-abiding producers."

IIIABNY said New York law gives a party 30 days from the entry of a court decision to file a notice of appeal. The associations filed the notice to preserve their right of appeal. IIABNY said it will be months before they submit their arguments to the appellate court.

The other major agent association in New York, the Professional Insurance Agents of New York, has declined to enter the suit, saying that while it does not support the regulation, it would work with the department to make the regulation practicable.

An official from the New York Department of Insurance was not immediately available for comment.

Special Reports /

N.Y. Agent Associations To Appeal Disclosure Ruling

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