Posted on 03 Dec 2009
California's insurance commissioner wants $12 billion in investments by companies doing business Iran completely divested in a move that could be mirrored by other state regulators.
Six months ago, the state's top insurance regulator, Steve Poizner, required 1,327 insurance companies licensed in California to disclose their investments in countries his agency designated as "state sponsors of terrorism," beginning with a review of Iranian investments, according to a statement. Poizner’s goal, he said, was also to find out if any premium dollars from California consumers ended up invested in Iranian companies.
As a result of the probe, 1,111 companies complied with the request and 216 did not respond.
Poizner said he plans to subpoena a representative sample of 10 of the non-respondents to explain why they ignored his request at a Jan. 12 hearing. Among the companies facing a subpoena are Anthem Blue Cross Life and Health Insurance Co., Travelers Indemnity, Insurance Co. of the West and Old Republic General Insurance Corp.
The companies that did respond revealed $12 billion in investments in companies that do business with Iranian energy, nuclear, banking and defense industries. Poizner said his staff has verified $6 billion of insurer investments, and urged the sale of any such holdings by insurers operating in California.
“I call upon the insurance industry to do what’s right and divest themselves of these investments,” Poizner said. “If they do not do it voluntarily, I will use every tool at my disposal to force divestment.”
Poizner told the Los Angles Times that he intends to discuss his plans with other state regulators at a meeting of the National Association of Insurance Commissioners, which convenes Dec. 5 in San Francisco.
The San Francisco Chronicle quoted Kevin McCarty, Florida’s insurance commissioner and secretary of the NAIC, as stating he would consult other commissioners to gauge the practicality of developing a national effort.
Pennsylvania Insurance Commissioner Joel Ario told the newspaper “we ought to do it through the states, but in a coordinated fashion,” adding he too is considering a divestment push in his state.
The California Department of Insurance plans to provide a list of the companies doing business in Iran, many of which are in South America, China, Russia and Europe.
One the list is released, insurers will have 30 days to notify Poizner’s department in writing that they will comply with the divestment request and disclose the value of the identified investments. They will then be given 90 days to sell the stock or holdings.
Applying ‘maximum pressure’
Those not voluntarily agreeing to divest will be on another public list with their executives facing a subpoena to tell Poizner why it is in the interest of California policyholders “to be invested in companies propping up Iran’s energy, nuclear, defense and banking sectors,” according to his office.
If, after the hearing, an insurer still will not divest its holdings, Poizner said he will take “all legal action available” to effectuate divestment.
“The government of Iran continues its oppressive crackdown against its own people, and thumbs its nose at the international community over its expanding nuclear program,” said Poizner. “Iran’s ambition to dominate the region under a nuclear umbrella is a very serious threat to this country and to people all over the world. It’s just wrong for consumers here in California to find out that their hard-earned money that they pay in insurance premiums are propping up the regime in Iran. We need to do whatever it takes to put maximum pressure on Iran to change its behavior.”