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Calif. Assembly bill targeting insurance industry ties with Iran advances

by Jonah Lowenfeld

May 9, 2012 | 11:14 am

A bill in the California State Assembly that would dissuade insurance companies based in the state from making indirect investments in Iran has been approved by committee, a key step on the way to becoming law.

The bill, jointly authored by Assembly members Bob Blumenfield (D-San Fernando Valley) and Mike Feuer (D-Los Angeles), is yet another instance of lawmakers at all levels trying to use economic tools to pressure the Iranian regime into abandoning its pursuit of nuclear capabilities.

The bill, known as AB 2160, would discourage California-based insurance companies, which are already prohibited from making large direct investments in Iran, from making indirect investments in Iran, by stopping those insurance companies from listing those investments on the financial statements they are required to submit to the state Insurance Commissioner.

In 2009, insurers licensed to do business in California held $2 billion worth of indirect investments in companies tied to Iran, according to a study conducted in 2009 by then-Insurance Commissioner Steve Poizner.

If the bill becomes law, insurance companies will still be able make indirect investments, but those assets would not be counted by the insurance commissioner to determine the fiscal soundness of insurers doing business in the state.

The bill passed through the Assembly Insurance Committee on May 1, over the objections of a number of groups representing the insurance industry who argued that the bill intrudes on federal authority over foreign relations.

Blumenfield, who co-authored a 2011 law with Feuer that increased transparency demands on California’s largest public pension funds as they divest from Iran, believes that the state is acting within its rights.

“Iran’s pursuit of nuclear weapons, its support of international terrorism and its despotic rule pose a serious threat to peace,” Blumenfield said in an e-mailed statement. “This threat demands that states and the federal government do everything possible to prevent Iran from acquiring nuclear weapons. My bill is an opportunity for California to further isolate Iran’s reckless regime and stand for peace.”

The Jewish Public Affairs Committee, which was the only group to support the bill at its committee hearing, is set to lobby Sacramento lawmakers in support of the bill on May 15.

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