NU Online News Service, Jan. 30, 2:34 p.m.EST

The California Insurance Department and insurance tradeassociations have reached settlement of litigation concerningefforts to curtail insurer investments in companies doing businessin Iran.

The initiative was a pet project of former InsuranceCommissioner Steve Poizner and caused much angst in the insuranceindustry.

Under the settlement, the insurance department dropped a lawsuitfiled by Poizner in November 2010 challenging a stateadministrative law judge decision which held that Poizner's effortsto bar Iranian investments by insurers constituted an “undergroundregulation.”

The decision was announced late Friday by the new InsuranceCommissioner Dave Jones.

Under the agreement, the insurance department will be permittedto maintain a public list of businesses involved in volatilesectors of the Iranian economy.

But insurers will no longer be required to file quarterlyreports regarding their Iran-related investment activities nor willsuch investments be disallowed for purposes of determiningfinancial solvency of the insurers.

Jones says this requirement was dropped because insurerfinancial statements already contain this information.

At the same time, the settlement allows the California insurancecommissioner to retain the power to independently review andpublicize the names of insurers with investments in Iran-relatedbusinesses.

Insurance trade groups involved in the settlement include theAmerican Council of Life Insurers, American Insurance Association,the Association of California Insurance Companies, the Associationof California Life and Health Insurance Companies and the PersonalInsurance Federation of California.

“The resolution of this litigation is an important step forwardfor our efforts to make sure that the public, insurers, andinvestors are aware of companies doing business in the nuclear,military and energy sectors of Iran's economy, particularly inlight of the growing nuclear threat posed byIran,” Jones says.

As a result of the settlement, the commissioner will withdrawthe lawsuit against the California Office of Administrative Law(OAL), and the insurer trade associations have agreed to withdrawtheir legal challenge to the commissioner's efforts to publicizeinsurer investments in companies engaged with Iran.

Jones justified the department's aggressive efforts to curbinvestments in Iran. In a statement, he says that since theDepartment of Insurance began publicizing information aboutinsurance companies investing in companies doing business inIran,“significant numbers of insurance companies have ended theseinvestments.”

His statement cites a list maintained by the department of 43businesses engaged in the Iranian nuclear, military or energysectors of Iranians available to the public.

Story corrected to clarify that the department has notdropped its efforts to end insurers' Iran investments, but rathersettled a particular lawsuit.