NU Online News Service

Five insurance trade groups have filed a petition asking California officials to review whether the state insurance commissioner created "illegal underground regulations" concerning Iranian investments.

Beginning tomorrow, under the contested regulations Commissioner Steve Poizner has said he will not credit any investment on an insurer's balance sheet in any of 50 companies he has blacklisted for involvement with Iran.

On Friday, companies will be required to return a form notifying the Insurance Department whether they will or will not be investing in the 50 companies on the list.

Yesterday's filing of the 17-page petition with the California Office of Administrative Law does not enjoin the commissioner from eliminating recognition of the contested investments on insurers' financial statements, which could lower their capital and surplus levels.

If accepted, however, it could lead to a legal evaluation that would void the regulation.

Last Friday, the five insurance trade groups had issued a statement calling his creation of the regulation without the normal hearing process a "well-intentioned but misguided" move that would establish a "perilous precedent" because it involved regulation without due process, "with no legal authority."

The trade groups involved are the Association of California Insurance Companies, the Personal Insurance Federation of California, the American Insurance Association, the American Council of Life Insurers and Association of California Life and Health Insurance Companies.

On Feb. 19, the organizations had written the commissioner, contending among other things that his actions would put insurers licensed in other domiciles "in direct conflict with their respective regulators."

The letter asked how he determined jurisdiction "over non-domestic insurers' statutory financial statements" and how he was coming up with criteria for companies on his list.

In their petition, the groups said he had never identified the laws he based his action on, adding that the state code does not give him "any apparent authority to regulate the content of financial statements..."

It called the issue "a matter of great importance" noting that "a company that files a false financial statement may lose its certificate of authority."

Commissioner Poizner last Friday issued a statement that 460 insurers had agreed in writing to a moratorium on future investment in the 50 listed companies that the department says do business with the Iranian energy, nuclear and defense sectors.

Poizner, who is running in the Republican primary for governor, said he will be releasing more information in the future about his "request for an investment moratorium..."

His office did not immediate respond today to a request for comment concerning the petition.

Ken Gibson, vice president of the American Insurance Association, said yesterday that each company will now have to decide individually how they will respond to the filing demands of the regulation.

Special Reports /

Insurance Groups Challenge Calif. Action On Iranian Investments

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