In a 5-0 decision, the court held that in doing so, the DFS "can adopt regulations that go beyond the text of the ['insurance law]."

It upheld a decision by Judge Richard Platkin of State Supreme Court in Albany of Nov. 24, 2010 dismissing the complaints of two agents' groups that the regulation, known as Regulation 194, was arbitrary and capricious.

The panel further said that, the DFS' authority to issue the regulation is grounded in insurance law, "which vests respondent with authority over the licensing and discipline of insurance producers."

It rejected the argument of the agents and brokers who brought the suit that the DFS must await a decision by the state legislature to pass a law imposing additional disclosure requirements on agents and brokers.

"…the absence of a specific statutory delegation of authority…does not bar the challenged regulations," the opinion says. "Nor does the legislature's consideration and refusal to pass a bill confirm that it has not adopted any policy that could stand as a basis for" the regulation."

"The legislature's failure to enact [a requirement that third-party compensation be disclosed], despite having repeatedly considered doing so…evinces a legislative preference to yield to administrative expertise in filling in an interstice in the statutory scheme by the setting of such [a requirement]," it says.

The suit was brought by the Independent Insurance Agents and Brokers of New York (IIABNY) and the Council of Insurance Brokers of Greater New York (CIBGNY).

In a statement after the decision was handed down, Christopher A. Brassard, chairman of the IIABNY says, "The Independent Insurance Agents & Brokers of New York still believes that Insurance Regulation 194 is a burdensome, unnecessary regulation that imposes new duties on insurance producers beyond those in existing law."

The statement adds that, "We are very disappointed that the justices of the appellate court ruled otherwise," and "respectfully disagree with their conclusion."

The statement says that the regulation places unprecedented obligations on law-abiding insurance producers without providing any benefit to consumers."

It added that "In the coming days, the IIABNY board of directors will review the court's decision and contemplate appropriate courses of action."