California Commissioner, Trade Groups Reach Settlement on Iran Investment

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

The California Insurance Department and insurance trade associations have reached settlement of litigation concerning efforts to curtail insurer investments in companies doing business in Iran. 

The initiative was a pet project of former Insurance Commissioner Steve Poizner and caused much angst in the insurance industry.

Under the settlement, the insurance department dropped a lawsuit filed by Poizner in November 2010 challenging a state administrative law judge decision which held that Poizner's efforts to bar Iranian investments by insurers constituted an “underground regulation.”

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

Under the agreement, the insurance department will be permitted to maintain a public list of businesses involved in volatile sectors of the Iranian economy.

But insurers will no longer be required to file quarterly reports regarding their Iran-related investment activities nor will such investments be disallowed for purposes of determining financial solvency of the insurers.

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

At the same time, the settlement allows the California insurance commissioner to retain the power to independently review and publicize the names of insurers with investments in Iran-related businesses.

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

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

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

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

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

Story corrected to clarify that the department has not dropped its efforts to end insurers' Iran investments, but rather settled a particular lawsuit.