California Insurance Commissioner Steve Poizner says that California insurers hold $12 billion in Iran-related investments and that he will push them to divest.

Another regulator, Florida Insurance Commissioner Kevin McCarty, says Poizner’s effort should go national.

“I have consulted with other state insurance commissioners to evaluate the practicality of developing a national initiative similar to the undertaking by the California Department of Insurance,” McCarty says.

McCarty, the secretary-treasurer of the National Association of Insurance Commissioners, Kansas City, Mo., says he has contacted the NAIC’s Securities Valuation Office to “ascertain the feasibility of leveraging national resources to review the financial statements of national insurers to determine their exposure to companies with operations in Iran.”

Poizner has promised to use subpoenas, publicity and deadlines to force more than 1,300 insurers under his jurisdiction to divest Iranian investments.

The companies that California insurers have invested in “do business with the Iranian energy, nuclear, banking and defense industries,” Poizner says.

Poizner says he launched the probe 6 months ago to ensure insurance industry compliance with a new state law that prohibits California insurers from investing in countries designated as “state sponsors of terrorism.”

Poizner says he also wanted to “determine the amount of insurance premium dollars, if any, paid by California consumers that end up invested in companies that do business with the energy, nuclear, banking and defense sectors of the Iranian economy.”

Poizner has reported that, aside from the holdings that insurers reported in response to the data call, his staff has independently verified at least $6 billion of insurer Iran investments.

“I call upon the insurance industry to do what’s right and divest themselves of these investments,” Poizner says. “If they do not do it voluntarily, I will use every tool at my disposal to force divestment.”

The California Insurance Department, says Poizner soon will give insurers licensed to do business in California a list of companies that are doing business with the Iranian energy, nuclear, banking and defense industries.

Many of these companies are based in South America, China, Russia and Europe, Poizner says.

Insurers then will have 30 days to notify the California department in writing that they will comply with the divestment request and disclose the value of the identified investments. Insurers will be given 90 days to eliminate those holdings from their portfolios.

Companies that do not voluntarily agree to divest will be named on a public list that the California department will compile, which will divulge the name and value of their Iran-related investments, officials say.

Poizner says he also will subpoena high-ranking executives of the insurers to testify under oath and ask them why they believe it is in the interest of California policyholders for their premium dollars to be invested in companies propping up Iran’s energy, nuclear, defense and banking sectors.

If, after the hearing, an insurer still refuses to divest, Poizner says he will take all legal action available to him 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,” Poizner says.

“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,” he says. “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.”

He reported that out of 1,327 insurance companies licensed in California and required to respond to the probe, 1,111 have complied. The other 216 did not respond.

Poizner says he will subpoena a representative sample of 10 of the non-responders to explain why they ignored the data call. That hearing will be held Jan. 12, 2010, in Los Angeles.

About $6 billion of the investments already located are in the Iranian banking sector, and about $4 billion in the Iranian energy sector. About $147 million are in the nuclear sector, $40 million are in the defense sector, and $1.8 billion are unclassified.

Although insurers had invested directly in companies with Iran-related activities, reported direct investments in Iran itself were listed as zero.

McCarty says his Office of Insurance Regulation monitors compliance with the ban on investments related to terrorists and terrorist-support organizations identified by the U.S. Treasury Department.

It is illegal for insurers to invest directly in companies with business operations in the defense, nuclear, petroleum or natural gas, or banking and financial services industries in Iran, McCarty says.

He says the the Florida OIR is looking at California’s method of examining insurers for investments in companies with operations in Iran, including investments in securities denominated in Iranian currency, “with an eye toward creating a complete and thorough analysis of compliance with state and national laws.”

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CLARIFICATION: An earlier version of this story gave an ambiguous description of the holdings of the insurers identified in the California report. The insurers have investments in companies that do business in Iran, but not in companies or other entities based in Iran.