New York Widens Probe Into Insurers’ Compliance with Iran Sanctions

July 24, 2013 by David McLaughlin

Zurich Insurance Group AG is among companies being questioned by New York’s insurance regulator in a widening investigation into compliance with a law imposing sanctions against Iran, a person familiar with the matter said.

The state Department of Financial Services today asked insurers to explain their policies and procedures to avoid violations of the federal Iran Freedom and Counter-Proliferation Act of 2012, according to a letter to the companies obtained by Bloomberg News. The act took effect July 1.

“The resulting sanctions could jeopardize the ability of any involved insurer to conduct business in the United States,” the department said.

The regulator, led by Superintendent Benjamin Lawsky, contacted insurers in June about compliance with the law. They included Swiss Reinsurance Co. and Lloyd’s of London.

Besides Zurich, companies contacted through the newest letter are American International Overseas Ltd., AXA Global Risks, and St. Paul Reinsurance Co. Ltd., according to the person familiar with the matter, who wasn’t authorized to speak publicly and asked not to be named.

The department previously said it learned that several insurers issued coverage that applied to trades made with Iran and cited as an example a claim submitted over a shipment of metal products from an Iranian entity to a European company.

The regulator asked insurers for copies of compliance policies and procedures and to identify any instance in which they invoked a sanctions clause to refuse payment of a claim. It’s also seeking every policy issued to Glencore Xstrata Plc or Trafigura, according to the letter. Those companies have been linked to a pattern of trades with Iran, the department said, citing “recent news reports.”

With assistance from Noah Buhayar in New York. Editors: John Pickering, Charles Carter