I just received a “clarification” in response to my criticism of Steve Poizner from a man named Darrel Ng, who identified himself as the press secretary for the “dept of insurance where Steve Poizner is insurance commissioner.”

You are correct in saying that our role is to make sure that those who pay premiums ‘get our money.’ That’s exactly what we’re doing here. We consider investments in Iran risky, especially in a class of risk called asymmetric or reputational risk. (This is a risk recognized by the SEC.) In short, the companies who are doing business in Iran have a huge exposure to adverse media coverage that could affect their stock price. Here’s an hypothetical example. An electronics company does business with the Iranian defense sector. One of their products is used in a terrorist attack — which experts believe is likely in the next 6 months — and the fact that their product is used gets reported. Their stock price would be hammered in such a situation. History has many examples of stock prices being hurt by negative press.
We believe that disqualifying these investments from an insurance company’s reserves — the money set aside to pay future claims — protects consumers and helps as them (as you put it) get their money.

I’m sorry, but this doesn’t pass the smell test. Poizner is worred that some companies do business with a company that does business in Iran and it might under some hypothetical event hurt California insurance companies because of press coverage — so he calls a press conference and threatens to subpoena any insurance company that does not reveal this information? C’mon Steve, be honest.

Moreover, Poizner’s rep did not reply to my other criticism: This is a standard that could be used by any insurance commissioner to gain political points with his base, including his San Francisco base. Hey, if it’s known your company does business with someone who donated to Prop 8, that could hurt their bottom line, couldn’t it? There’s no way to cabin such a political strategy. It should be killed in its cradle.

Politicizing insurance regulations remains a very bad idea. Also, Steve, if you are going to play Jack Bauer, insurance commissioner, it is an even worse idea not to level with voters about why you are really doing it. They have eyes.