I came across an article today that got me thinking on the impact U.S. sanctions regulations have on the insurance industry.

The article is here and discusses a response from the American Insurance Association (“AIA”) regarding a request by California Insurance Commissioner that domestic insurers, “divest any direct investment in Iranian government holdings and require all insurers doing business in California to report all investments in companies that do business with the defense, nuclear, petroleum, natural gas or banking sectors of the Iranian economy.”

The Iranian Transactions Regulations have been out for quite sometime now, so Im surprised it took the California Insurance Commissioner took so long to make sure a request. Especially, with such a large population of Iranians who may be looking to engage in business with partners back home. Well, I guess better late than never.

It does bear repeating, however, that insurer’s need to be incredibly careful when doing business new customers. There is a whole lot of room in the sanctions regulations for interpretation of what “facilitation” or “material assistance” of a transaction could mean. As always when dealing with the Office of Foreign Assets Control (“OFAC”) tread cautiously, hire a good law firm, and do your due diligence.