The Insurance Journal reported early this morning that Steve Poizner, California Insurance Commissioner, has stated that he is filing a lawsuit challenging last month’s decision from the California Office of Administrative Law (OAL) that his efforts to prevent insurance companies from investing in Iran constituted an “underground regulation.”

Poizner’s lawsut contests the OA’s analysis of this issue and also seeks to clarify his authority to address the issue at all. Attorney General Jerry Brown is representing the commissioner in the suit.

In a statement to the press, Poizner said, “I intend to ensure that any insurance company licensed in California is not doing business, in any way, with the Iranian regime. 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.”

The commissioner launched an initiative to identify Iran-related investments in insurers’ portfolios In June 2009, asking that the 1,300 insurance companies licensed in California identify all investments in companies doing business with the Iranian defense, energy and nuclear sectors. Fifty companies with ongoing business activities in Iran were identified by the Department of Insurance, and in the spring of this year, the commissioner requested a moratorium, beseeching insurance companies not to make any new investments in companies on the CDI list. More than 1,000 of them agreed to this.

Despite this, 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 grouped together to express their concerns with the law, and to file a petition with the OAL, because they believed the state insurance commissioner’s anti-Iranian investment rules constituted an “underground” regulation.

Tags: California, insurance, iran, lawsuit, poizner