A New York state rule requiring insurance brokers to disclose who is paying their commissions was upheld last week by an appellate division of the New York State Supreme Court.

The court's ruling involves Regulation 194, issued by the state's Insurance Department in 2010, which requires insurance brokers or agents to inform customers of their role in insurance sales, as well as any compensation they will receive from the insurer or a third party, and any factors that impact that compensation. The Council of Insurance Brokers of Greater New York, the Independent Insurance Agents & Brokers of New York and other groups challenged the rule in court, arguing that the Insurance Department didn't have the authority to issue it and that there was no "rational basis" for the rule.

The appeals court affirmed a 2010 decision by the State Supreme Court in Albany that the rule was valid. The appeals court said that the department had the necessary authority and the bid-rigging scandal that was kicked off by a 2004 probe by then-New York State Attorney General Eliot Spitzer demonstrated a "rational basis" for the rule.