California’s insurance commissioner said he intends to subpoena insurance companies that did not comply with his probe of insurance companies and Iran.
Commissioner Steve Poizner announced yesterday that he intends to urge–and perhaps coerce–insurance companies doing business in California to divest themselves of investments that benefit Iran’s defense, nuclear, energy and banking industries.
Poizner said he conducted a probe of insurance company investments and found that the companies have $12 billion invested in companies that do business with Iran.
He said that in conducting the probe he surveyed all 1,327 insurance companies licensed todo business in California. All but 216 companies responded. Poizner said they are required by law to respond. Therefore, he is going to subpoena 10 of those companies to make an example of them.
The companies are: Travelers Indemnity Co., PMI Mortgage Insurance Company, Thrivent Financial for Lutherans, Farmington Casualty Company, Old Republic General Insurance Corporation, American Home Assurance Company, Anthem Blue Cross Life and Health Insurance Company, Insurance Company of the West, Medical Insurance Exchange of California, and Sequoia Insurance Company..
Poizner, who is seeking the Republican nomination for governor next year, is lining up support from other states’ insurance regulators even as insurance companies object to a state-by-state approach they said could interfere with U.S. foreign policy.
Florida Insurance Commissioner Kevin McCarty, secretary-treasurer of the National Association of Insurance Commissioners, said he is consulting other states’ commissioners to see if it is practical to develop a national effort similar to
“We ought to do it through the states, but in a coordinated fashion,” said Pennsylvania Insurance Commissioner Joel Ario, who also is considering a divestment push.
Steve Suchil, the American Insurance Association’s assistant vice president for state affairs, said the industry has never questioned Poizner’s authority to request the investment information.
Neither he nor John Mangan, Western regional vice president for the American Counsel of Life Insurers, could say if their member companies were likely to fight a divestment order.
Both said their member companies cooperated with Poizner to the best of their ability.
The companies were required to disclose investments in companies that do at least $20 million of business in Iran’s petroleum or natural gas industries, and list investments of any amount in companies doing business with Iran’s banking, nuclear or defense industries.
Ario said discouraging Iran’s nuclear program is in the national interest, particularly given the potential alternative if the Middle Eastern country develops nuclear weapons.
President Mahmoud Ahmadinejad said Tuesday that Iran is considering decreasing its cooperation with the International Atomic Energy Agency after it issued a resolution critical of Iran last week. Iran said it would build even more nuclear facilities.
“It ought to be a top priority for all Americans, including the insurance industry,” Ario said. “If none of the forms of deterrence that we’re using change Iran’s plans, then you have to say let them have nuclear weapons or we’re looking at a military strike.”
Poizner plans to use his opening remarks at this weekend’s quarterly meeting of the National Association of Insurance Commissioners in San Francisco to urge a nationwide effort. He scheduled a news conference Wednesday with an Iranian dissident and representative of the Simon Wiesenthal Center at the Museum of Tolerance in Los Angeles to outline his findings and next steps.
“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,” Poizner told The Associated Press before Wednesday’s announcement. “We need to do whatever it takes to put maximum pressure on Iran to change its behavior.”
Insurers say they already cooperate with the U.S. Treasury Department’s Office of Foreign Assets Control. Treasury spokeswoman Natalie Wyeth declined comment.
Poizner, who oversaw a National Security Council anti-terrorism division in 2001 and 2002, said he is trying to close “a giant loophole” in federal and state law that lets companies invest indirectly in Iran through other companies. The information disclosed by insurers shows most of those companies are based in Europe, South America, Russia and China, he said.
Poizner’s probe found no direct investments in Iran, which would violate a California law that took effect this year. But the companies reported $12 billion in legal indirect investments. The insurance department has been able to verify about $6 billion of those investments so far.
Poizner said yesterday he intends to give the companies that have responded to his probe, and which have investments, 30 days to say they will divest, and an additional 90 days to do so.
He plans to publish the names of the companies that don’t divest.
Poizner’s lawyers say he could force them to divest because the holdings are financially risky.
However, it is unclear if he could force divestment by companies headquartered outside California. Poizner’s lawyers previously said he could not, but now say they believe he has the authority.
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