California Insurance Commissioner Steve Poizner has announced he is filing a lawsuit challenging a California Office of Administrative Law (OAL) determination, issued last month that his efforts to stop insurers from investing in Iran constituted an “underground regulation.”
The commissioner’s lawsuit contests the OAL analysis of this procedural issue and seeks to clarify his authority to address the issue of insurer support of Iran and the solvency of insurer investment portfolios. Attorney General Jerry Brown is representing the commissioner in the lawsuit.
“I intend to ensure that any insurance company licensed in California is not doing business, in any way, with the Iranian regime,” said Commissioner Poizner. “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. The consensus is clear, as seen in the sanctions that the United Nations, the European Union, the U.S. government, and the California Legislature have imposed over the past two years — responsible businesses should not be doing business with Iran. Since companies doing business with Iran face financial risk, I have the authority to protect insurer portfolios from investments in those companies.”
In June 2009, the commissioner launched an initiative to identify Iran-related investments in the portfolios of insurers doing business in California, requesting that the 1,300 insurers licensed in California identify all investments in companies doing business with the Iranian nuclear, defense, and energy sectors. The Department identified 50 companies with ongoing business activities in Iran. During the spring of 2010, the commissioner requested a “moratorium,” calling on insurers not to make any new investments in companies on the CDI list. More than 1,000 insurers agreed to the moratorium.
However, the Association of California Insurance Companies, the Association of California Life and Health Insurance Companies, the Personal Insurance Federation of California and the American Insurance Association all expressed concern with the law, and filed a petition with the OAL seeking a decision as to whether the state insurance commissioner’s rules on Iran investment activity constituted an “underground” regulation.
Source: CDI
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