Just ahead of Iranian President Mahmoud Ahmadinejad’s Wednesday address to the United Nations in New York, California Insurance Commissioner Steve Poizner encouraged his fellow state insurance commissioners to follow California’s lead and to probe insurance company investments for ties to Iran. The nation’s insurance commissioners are gathered this week at the National Association of Insurance Commissioners Fall National Meeting near Washington, DC.
“In California, state law prohibits insurance companies based in the state from investing in countries designated as state sponsors of terrorism,” said Commissioner Poizner, in a written statement. “I have launched an inquiry to ensure compliance with this law. I am also calling on my counterparts in other states to conduct similar probes. There is no question Iran’s government is a danger to the world.”
Nuclear watchdogs said this month that Iran had enough low-enriched uranium to produce one nuclear weapon, said Poizner in his statement.
In June, Commissioner Poizner, who is running for state governor, announced an effort to ensure California insurance companies were complying with state law that prohibited insurance companies from investing in countries designated as state sponsors of terrorism.
The California insurance code specifically prohibits any investment respecting a foreign jurisdiction, or any investment denominated in the currency of that foreign jurisdiction, if that jurisdiction is designated as a state sponsor of terrorism. This section of the code took effect Jan. 1, 2009. The insurance code also authorizes the Insurance Commissioner to evaluate the “soundness” of investments by California insurance companies.
Insurance companies generally invest premium dollars as they are received until they are needed to pay claims. For example, a life insurer may collect premiums for decades before the policy is paid out.
The goal of the survey will be to determine an insurer’s level of indirect investment in specific sectors of the Iranian economy as well as direct investments in the Iranian government. Each insurer licensed to do business in California will be required to list any investment in a company that conducts more than $20 million worth of business in the Iranian petroleum or natural gas sectors. Insurers will also be required to list investments of any amount in companies doing business in the banking, nuclear, or defense sectors of Iran, including activities relating to the production of chemical, biological or nuclear weapons and technologies.
A preliminary CDI analysis shows that insurance companies that conduct business in California – which is the 4th largest insurance market in the world – have tens of billions of dollars of investments in companies with substantial business in Iran. Insurance companies are the largest investor group in the global economy, with an estimated $3 trillion to $4 trillion in investments.
This action will join an existing array of global and local economic and trade sanctions already in place against Iran, including measures by Congress, the European Union and the states of Missouri, Texas and Florida. California has taken similar measures in the past by directing the state’s two enormous public pension funds to divest Iranian holdings. Poizner seeks to complement federal efforts related to Iran by bringing his unique authority as insurance commissioner to bear.
Before his election as Insurance Commissioner in 2006, Poizner served as a White House Fellow in the National Security Council in the aftermath of the Sept. 11, 2001, attacks and helped build a new homeland security plan for the United States. He is also is a lifetime member of the Council on Foreign Relations.
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