California gubernatorial candidate, Steve Poizner badly trails in the polls to his competition in the upcoming Republican primary, 63-14%, according to a recent Field Poll. So, when you’re so far behind that the leader can barely see you in the rear view mirror, what do you do? Either continue to say you are for ‘mom and apple pie’ or find an evil to denigrate.
And, California Insurance Commissioner Steve Poizner has indeed found an evil in the current Iranian regime. The Candidate has instituted a one Commissioner jihad against insurers who invest in securities with links to Iran. Publishing an arbitrary list of these ‘bad’ investments, he has requested that any insurer doing business in the Golden State sell these investments and pledge by April 2 to never invest in them again. Candidate Poizner has threatened to publish a list of insurers who do not comply.
Last we checked, no state insurance commissioner has the authority to conduct foreign policy on behalf of the United States. Thus, it is not surprising to see today’s news that five insurance trade groups have taken legal action to stop implementation of such regulations. The groups set forth the usual reasons for their case, including the ‘where will it stop?’ defense, as well as a reference to existing and pending Federal law concerning doing business with Iranian related entities.
However, the Candidate’s actions are not that unusual. Commissioners who are current or potential candidates tend to use their current position as a platform for their own agenda. And, this will mean, from time to time, that investments will come under fire. It has occurred in the past and will undoubtedly occur in the future.
But, in his current vilification of a very narrow type of investment, the Commissioner is misrepresenting his mandate to protect policyholders.
If he wants to protect policyholders from poor investment practices, then promulgate regulations that foster improved investment processes across various types of insurers. Of course, this would require the Insurance Department to have sufficient expertise to judge such practices, but shouldn’t competence be required of our state and federal agencies, or am I asking too much?
And, such a focus on the investment process would require a more measured and nuanced approach than is found in the ‘cookie cutter’ approach to regulation now primarily utilized. Importantly, it would be very difficult to grab headlines, but it could be worthwhile for both insurers and policyholders.
We are in no way suggesting that state and/or federal authorities should regulate investments any more than they do now, just that they could be taking an improved, more productive approach: one that would be focused on competence not on politics.
Mr. California Commissioner, if you want to protect your policyholder constituents from bad investments at their insurers, focus on the process.
Is there another AIG festering under your nose? How would you know, if you’re primarily focused on their investment in 50 arbitrary bond issuers?
But, if you want to try to win an election, find an arbitrary enemy, attack it and get ready to write off your own poor investment of time and money. Your constituents deserve better.