LOS ANGELES (CN) - Insurance Commissioner Steve Poizner sued the state Office of Administrative Law in a dispute over Poizner's request that all insurers doing business in California agree not to invest in companies working with Iran's "nuclear, defense and energy sectors." Poizner claims he acted "to safeguard insurer assets and the interests of policyholders," and that his act was not "underground regulation," as the Office of Administrative Law contends.
The Office of Administrative Law is a government agency responsible for ensuring that the state's regulations are clear, necessary and legally valid.
In his Superior Court complaint, Poizner claims that he made the decision in an effort to safeguard insurers' portfolios from risks of investing in Iran.
"Iran's pursuit of nuclear weapons, its support of international terrorism, and its despotic rule not only render it unstable politically and economically, but put at risk any company that does business with the Iranian nuclear, defense, and energy sectors," Poizner says in his complaint.
After months of study, Poizner says, his office compiled a list of 51 companies doing business with Iran's nuclear, defense and energy sectors; he claims the companies' investments are at risk because of those dealings.
Poizner asked insurers doing business in California asking that they voluntarily agree not to invest in companies on that list. He also deemed all Iran-related holdings "non-admitted" on California financial statements, meaning that the insurers could continue to hold those investments but the assets would not count toward the insurers' required surplus.
Poizner says he received responses from nearly all of the 1,300 insurers admitted to do business in California, but five insurance trade associations petitioned the Office of Administrative Law, arguing that the decision constituted "underground regulation."
The OAL agreed and determined that Poizner's actions were invalid.
Poizner claims that his decision is not a regulation and that he is just doing his job.
He asks the court to find the OAL's determination improper and is set it aside.
Poizner is represented by California Attorney General Jerry Brown.
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