The Council of Insurance Brokers of Greater New York said it will join the legal effort to defeat New York's compensation disclosure rule for producers.

CIBGNY said it will be part of the suit being developed by the Independent Insurance Agents and Brokers of New York, challenging the New York State Insurance Department's new disclosure rule due to take effect next year.

CIBGNY is an association representing independent insurance brokers in the New York City Metropolitan area.

Tim Dodge, an IIABNY representative, said he believes the associations plan to file a court challenge under Article 78 of the New York Civil Practice Laws and Rules sometime next month, but he had yet to confirm that timeline.

"The Insurance Department's insistence on forcing an overbearing and burdensome regulation on our members is more than troubling," CIBGNY President Anthony Aquilino said in a statement. "Once our board decided recently to initiate an Article 78 proceeding, it was a logical next step to work with IIABNY and protect the interests of both our members."

CIBGNY's legislative chair, Anthony Calafiore, added that "while we have no problems in disclosing that we are compensated for providing the insurance, it should be at the time of sale, and not when quoting the account."

Under the new department regulations, slated to take effect on Jan. 1, 2011, producers will be required to describe to consumers their role in the transaction and how they get paid. If the client requests it, the agent or broker will have to provide a more detailed statement about compensation. (Go to http://bit.ly/c5Lt9x for more details.)

IIABNY says the new rules place an undue burden upon agents for no justifiable reason, and has questioned whether the department has the authority to promulgate the regulation.

The proposed regulation was published after extensive hearings. It was developed in response to a 2005 New York attorney general's office investigation revealing that some commercial insurance brokers took hidden payments to steer clients to insurers involved in a bid-rigging scheme.

The Professional Insurance Agents of New York previously announced it would not join IIABNY in filing the suit. (Go to http://bit.ly/bfMPKF for details.)

PIANY President Kevin M. Ryan has stated that while he sees the value in filing a suit, he believes PIANY can best represent producer interests by retaining its seat at the negotiating table with the department.

The department has said it would be "very difficult" to have open discussions about the regulation with any entity that is party to a lawsuit against it.