Insurance firms doing business in California have reduced their investments in Iran-linked companies by 97% since the state pressured them to divest in 2009. But eight businesses, including State Farm, continue to maintain ties.

California does not have the power to bar the multi-national companies from dealing with  Iran, which has been the subject of international sanctions for years because of its nuclear program. The U.S. State Department describes Iran as an “active state sponsor of terrorism.”

But Insurance Commissioner Dave Jones and his predecessor, Steve Poizner, have used the power of the bully pulpit to convince most of the state’s 1,300 licensed insurers not to invest in foreign-owned companies that do.

In 2009, companies were doing $6 billion worth of business with corporations tied to Iran’s military, energy and nuclear sectors. Business has dropped to $198 million, according to Jones. He did not provide investment figures for each insurer.

Supporters of divestiture argue that, beyond the moral and political implications of dealing with Iran, investments in the country are volatile and put the insurance companies at risk.

State Farm disagrees and spokesman Bob Devereux released an email that said, “While we respect the California Department of Insurance’s interest, we believe foreign policy and rules on foreign investments can be most effectively addressed by the federal government.”

When the state initiated the divestment regulation, it included a provision to allow the commissioner to disallow Iran-related direct investments. But a Superior Court judge ruled that went too far and limited the regulation’s power to jawboning.

The eight insurance companies still dealing with corporations doing business with Iran are:

1. State Farm Mutual Automobile Insurance Company

2. Connecticut General Life Insurance Company

3. ING USA Annuity and Life Insurance Company

4. The Ohio National Life Insurance Company

5. Ohio National Life Assurance Corporation

6. Life Insurance Company of North America

7. National Guardian Life Insurance Company

8. Assurity Life Insurance Company

–Ken Broder

To Learn More:

State Farm Invests in Iran-Linked Firms, California Says (by Zachary Tracer, Bloomberg)

California Commissioner Fingers Insurers for Iran Investments (by Don Jergler, Insurance Journal)

California Official Chides State Farm for Indirect Iran Investments (by Marc Lifsher, Los Angeles Times)

Insurers: Iran Related Investments (California Department of Insurance)