I admire the passion of Insurance Commissioner Steve Poizner. Having gotten to spend a lot of time with him over the last five years or so, I know him as someone who really pours his heart and soul into just about everything he does. I figure it takes that kind of drive to have his level of epic success in business, and it certainly takes an Energizer-Bunny type level of activity to get elected to statewide office as a Republican in California, let alone to now be running for the Republican nomination for Governor. I know Steve to be a good man, who is passionate about making a difference.
I preface this column with these comments because I don’t want FR readers to misinterpret a critique of an individual policy proposal of the Commissioner as some sort of rebuke of the man, which it certainly is not. Nevertheless I have been troubled by a proposal he has generated from the Department of Insurance, which I wanted to address. I have brought this up directly with Poizner, so he won’t be surprised to read it here.
Last year Insurance Commissioner Poizner rolled out what I thought was a creative and useful plan to review the substantial financial holdings of insurance companies (it is a huge amount of money as laws require insurance companies to keep huge amounts of assets in case they need to pay out large numbers of claims) and ensure that none of investments are illegally invested into countries, such as Iran, that harbor terrorists or worse. A list is maintained by the United States Office of Foreign Assets Control (OFAC) in the Treasury Department of such companies, delineated through a pretty rigorous process. That makes sense, because it is serious business to restrict the private property rights of Americans, telling them where they cannot invest their money, and what they can or cannot own.
A review of all of the holdings of the state’s insurance companies revealed that none of them were invested in OFAC delineated “banned” foreign investments. A worthwhile exercise and Poizner should be commended. I believe other Insurance Commissioners around the country are following Poizner’s lead, as they should.
But it is at this point, with all due respect, that I feel the Commissioner proposes to take a step too far as he now wants to now regulate foreign investments well beyond the power of his office (by the way, Proposition 103 gives so much regulatory power over insurance companies to the Insurance Commissioner that it is impressive that Poizner found a way to even propose going beyond them). The Commissioner has developed, in essence, his own list of companies that he has determined do inappropriate business with Iran, and plans on coercing insurance companies to divest from the companies he has chosen.
Let’s me interject, at this point, that the nation of Iran sucks. Under the regime of their current political leader, Mahmoud Ahmadinejad, the country is fostering terrorism and injecting an element of extreme anti-Americanism in the Middle-East that is very concerning. It’s really bad news. I urge the Iranian people to topple that regime, and I support an aggressive foreign policy by the United States government to deal seriously with this threat.
That said, I do not support a California State Insurance Commissioner (whether Poizner, or any other individual person) having the power to create their own list of companies beyond those specifically delineated by the federal government, and directing insurance companies to divest. In my humble opinion, if Poizner has a list of companies that he thinks need to be added to the “do not invest” list, then he should advocate to the federal government that they do so.
In some cases, depending on the situation, it may be appropriate to seek state level legislation, as Assembly Joel Anderson did with his bill to require CalPERS and CalSTRS to drop some of their Iran-related investments. Although in that case there was due process through the legislature, and CalPERS and CalSTRS are not privately owned insurance companies. Poizner’s argument that his is responsible for making sure that insurance company investments aren’t risky but are safe does not fly with me. In some instances he’s talking about major companies like Shell Oil. But more significantly, we should let the free-market resolve the risk issue, as none of these companies will have an interest in putting their assets at risk.
I believe that Poizner should step back and reexamine his proposal to start “going after” insurance companies that have investments that he personally disfavors. It is wrong to do so because it represents an egregious expansion of the powers of his office beyond that intended by the voters.
With all due respect, while this Commissioner (rightfully) is concerned about the actions of the Ahmadinejad regime in Iran, the next Commissioner may see the level of carbon emissions of some country as a world-threat, and create a “do not invest” list for insurance companies of businesses that do work in “high polluting” countries.
Let me make it clear that I know Steve Poizner’s intentions and motives are good here, and that he trying to develop innovative ways to help fight the war on terror at the local level. But that is the job of the federal government. Seeing that federal laws are enforced locally is a great idea, and again I applaud the Commissioner for doing so. But whether it is creating his own “do not invest list” and mandating compliance, or frankly even creating such a list and “suggesting” compliance by an industry that he can practically regulate (in other areas) by fiat, that goes too far.
This is not a rebuke or a negative statement on Poizner, just a call for a reexamination of a proposed policy.
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