With New York regulators citing consumer protection as the goal of a new broker compensation disclosure rule, a state agents’ organization says protecting its members is the key motivator to stop it from becoming law.

On Feb. 10, the New York State Insurance Department published a new compensation disclosure rule that will take effect Jan.1, 2011. The rule mandates producers to disclose all forms of compensation provided by an insurer if a consumer requests it.

The Independent Insurance Agents & Brokers of New York (IIABNY) said today (Feb. 11) it will proceed with legal action to stop the regulation from becoming law. The agents’ group said late last year that it was considering such action.

The trade group said it expects to file its legal action soon.

Dick Poppa

The IIABNY said in a statement that it received an advance copy of the final rule and after a three-hour meeting of its board of directors Feb. 8, it recognized some “positive changes” from earlier drafts. But its board concluded that the state insurance department, “the rule would place an undue burden upon its members for no justifiable reason.”

The IIABNY said it is also challenging the insurance department’s authority to issue the regulation.

“IIABNY has a responsibility to represent and to protect the interests of its members, and our members have unanimously and vociferously told us that this rule is unnecessary, ineffective and overly burdensome to their businesses,” IIABNY president and chief executive officer Dick Poppa said. “We cannot sit back idly and let the department impose an unnecessary rule that will only serve to add another time-consuming and costly requirement for our members, which in turn could also result in additional costs to consumers.”

The IIABNY was one of many stakeholders who weighed in on the proposed regulation over the last 15 months, dating back to hearings in 2008 by the New York State Insurance Department and the Attorney General’s Office to see whether the rule was needed in the first place.