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Member, Beacon International Group, Ltd.
ALBANY, N.Y.—Agent and broker groups are considering what steps to take now that a New York state court has upheld rules that will require producers to disclose incentive commissions they receive from insurers and other third parties.
The Independent Insurance Agents & Brokers of New York Inc. and the Council of Insurance Brokers of Greater New York sought to overturn the Producer Compensation Transparency rule, or Regulation 194 of the Official Compilation of Codes, Rules, and Regulations of the State of New York, that goes into effect on Jan. 1, 2011.
They argued that the state insurance superintendent lacked the statutory authority to promulgate the regulations and that certain aspects of the rules are arbitrary and irrational, among other things.
However, in a written decision last week, New York State Supreme Court Judge Richard M. Platkin rejected the arguments. He wrote that the plaintiffs had failed to demonstrate that the superintendent lacked the power to promulgate the rules and rejected arguments that Regulation 194 “unreasonably and irrationally imposes burdens on producers that were not intended by the legislature.”
Judge Platkin noted that the insurance superintendent had determined that the benefits of requiring disclosure outweighed the additional burdens on producers.
“We continue to believe that this regulation is an impermissible attempt to rewrite the insurance law and an unfair imposition of large costs on law-abiding insurance agents and brokers,” IIABNY Chair David M. Gelia said in a Friday statement on the DeWitt, N.Y.-based group's website.
“We have a mandate from our members to fight this unfair regulation,” Mr. Gelia said. “It is what they need us to do, and it is the right thing to do.”
He said that lIABNY and CIBGNY leaders will discuss what steps they should take next.