He added, "But that doesn't mean we are in favor of–and in fact, we are opposed to–a mandatory rule that's going to mean more paperwork, more notices that consumers don't necessarily want, more record keeping."

IIABNY and the Council of Insurance Brokers of Greater New York (CIBGNY) filed a joint legal action on May 24 to prevent the department from implementing a proposed producer compensation disclosure regulation (http://www.property-casualty.com/News/2010/5/Pages/Producer-Groups-Sue-To-Stop-Compensation-Disclosure-Rule.aspx ).

In response, Mr. Gaul said he was "disappointed [the broker groups] have elected to take this route," adding that reporting requirements in the proposed regulation are minimal (http://www.property-casualty.com/News/2010/5/Pages/Regulator-Disappointed-In-NY-Broker-Compensation-Lawsuit.aspx?k=NY+broker+compensation).

The groups said they filed the action in New York State Supreme Court in Albany to stop "a burdensome and confusing regulation that will require insurance producers to disclose to their clients certain information about how insurance companies compensate them."

Insurance Regulation 194, which takes effect on Jan. 1, 2011, requires producers to disclose certain information about their compensation to all clients, regardless of whether the clients have asked for it, the groups noted.

A third producer group in the state–the Professional Insurance Agents of New York State–has declined to be part of the litigation.

Mr. Gaul observed that "since 2004, [the broker groups] have claimed [transparency] is their position. Why are they fighting? Why litigate? What is it brokers are trying to hide?"

Mr. Gaul said the proposed regulation requires agents and brokers to give minimum reporting requirements to consumers, and producers are not required to report amounts of compensation received unless the information is requested.

Mr. Dodge said IIABNY objects to mandatory reporting requirements. He noted that "disclosure is happening all the time for those consumers who ask for it."

The new rule, he said, would be putting the focus on broker compensation "and taking it off of what's really important, which is the coverage they're buying and the prices they're paying for it."

Mr. Dodge also said the filing of the lawsuit "shouldn't have come as a surprise to [the department]. Before we ever went public with the news, our CEO had conversations with the superintendent of insurance telling him what we were going to do. We first informed [the department] of that in December."

He added, "And we did continue to meet with them in hopes of avoiding this, but it just didn't work out that way. They never got the regulation into a form that we could live with."

A call to CIBGNY was not returned.