California Commissioner Steve Poizner filed a lawsuit challenging the state Office of Administrative Law’s (OAL) ruling that his efforts to stop insurers from investing in Iran constituted an underground regulation.
Steve Poizner
The OAL intervened after the American Insurance Association (AIA) and other trade associations filed a petition asking whether actions by Poizner against insurers conducting business with Iran investments were rules that were not adopted according to formal rulemaking procedures, according to the AIA.
“I intend to ensure that any insurance company licensed in California is not doing business, in any way, with the Iranian regime,” Poizner said in a statement. “Insurance premium dollars that Californians pay should not end up supporting a regime that has shown time and time again its disregard for the concerns of the global community…Since companies doing business with Iran face financial risk, I have the authority to protect insurer portfolios from investments in those companies.”
In December 2009, Poizner required each insurer licensed in the state disclose its investments to learn if any premium dollars were supporting Iran.
More than 1,000 insurance companies agreed to forgo investments in the 50 companies identified by Poizner’s office as doing business with Iran’s nuclear, energy and defense sectors. In addition, the California Department of Insurance disqualified an estimated $6 billion in holdings in those 50 companies, and Poizner released the names of 296 companies who would not agree to his request.
Divestment actions such as those initiated by Poizner and other sanctions are influencing Iran’s economic “vitality” and imposing hurdles in the country’s development of nuclear weapons, U.S. Defense Secretary Robert Gates recently said.
Insurance industry investments in companies on Poizner’s list fell from $1 billion in 2009 to $32 million during the second quarter of 2010, after Poizner’s Iran Initiative went into effect, according to the California Department of Insurance. Some insurers are divesting Iran-related assets that had been acquired during the previous two decades, the Department said.
“These numbers…[demonstrate] that insurers can drop companies on the department’s list from their investment portfolios without adversely affecting their investment returns,” Poizner said in a statement.
Several nations, including the United States, Britain, China, France, Russia and the European Union, imposed sanctions on Iran. The California legislature also passed legislation barring contracts between California and companies doing business with Iran’s energy sector.
California insurance commissioner sues to stop Iran investments via IFAwebnews.com .
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