A trio of associations representing New York insurance agents has generated more than 7,300 messages from its members in opposition to a proposed broker compensation rule.

The New York State chapter and national chapter of the National Association of Insurance and Financial Advisors (NAIFA) and the Association for Advanced Life Underwriting (AALU) teamed for a grassroots outreach to members, asking them to file already prepared comments to the state insurance department and state legislators to oppose the measure.

The three associations have also said they are considering challenging the proposed regulation in court, becoming the second agents’ group to take such a step.

The proposed rule, still in the public comment portion of its consideration, would require agents and brokers to disclose to their clients information about their compensation. It comes 18 months after hearings by the New York State Insurance Department to see if such a regulation was needed.

In a letter to New York State Insurance Superintendent James J. Wrynn Dec. 4, the three groups outlined their opposition, notably that life insurance products – including life, annuities, long-term care and disability – should be omitted from the scope of the rule.

“The proposed regulation emerged from past problems on bid-rigging and steering in the property-casualty arena, and no problems have been identified in the life insurance product marketplace,” the heads of the organizations wrote. They added that if a steering problem were to occur, the proposed rule would not address it nor would it provide a benefit to consumers.

“But [it] would decrease sales, decrease financial protection, increase unemployment, hurt the state economy and increase the burden on state government programs,” the groups claimed.

The trio of associations said they are also considering an Article 78 challenge regarding the insurance department’s authority to make such a ruling. Named after Article 78 of New York law regarding civil practice laws and rules, the groups could argue their side in court against state insurance regulators.

The associations said a decision on whether to proceed on that course is still being decided.

If the groups do take their case to the courts, they will follow the steps of the Independent Insurance Agents & Brokers of New York, who announced earlier this month, they will sue to halt enforcement of the proposed compensation disclosure rules.