Organizations that represent New York state agents and brokers have gone to court to try to block implementation of a new compensation disclosure rule.

The Independent Insurance Agents & Brokers of New York, DeWitt, N.Y., and the Council of Insurance Brokers of Greater New York, New York, have started an Article 78 proceeding in the New York State Supreme Court in Albany, N.Y.

The groups are asking the court to keep the New York State Insurance Department from going ahead with adoption of Insurance Regulation 194.

The regulation, now set to take effect Jan. 1, 2011, would require insurance producers to disclose some information about their compensation to all clients, and much more detailed information to clients who ask for more details, according to the IIABNY and the CIBGNY.

The IIABNY has been calling for voluntary comp disclosures since 2004, but it believes the state mandate would be “burdensome for producers and of little benefit to consumers,” according to IIABNY officials.

The IIABNY and the CIBGNY are alleging in their court filing that the New York department does not have authority under New York law to mandate compensation disclosure, and that the regulation would “impose massive and unwarranted costs of compliance on brokers so as to constitute an arbitrary exercise of regulatory power.”

The IIABNY also has sent the New York department a proposed compensation disclosure model, in case the department goes ahead with implementing the regulation while the suit is in progress, the group says.