Oxendine offers explanation about appointment

State Insurance Commissioner John Oxendine offered his first explanation this week for why he appointed a longtime donor to chair a powerful behind-the-scenes insurance association.

Oxendine said the businessman, Delos “Dee” Yancey III, who is CEO of two Rome-based insurance companies, “kind of has to be on” the association because of state law.

Oxendine spoke to an Atlanta Journal-Constitution reporter for the first time Monday after the AJC reported Sunday that Yancey had served as chair of the Georgia Life and Health Insurance Guaranty Association since 1999.

Yancey and his companies have given to Oxendine for years. In early May, the AJC reported that two of Yancey’s companies, State Mutual Insurance Co. and Admiral Life Insurance Co. of America, funneled $120,000 — 10 times the legal limit — to Oxendine’s current campaign for governor. Insurance companies are prohibited by state law from giving money to campaigns of the insurance commissioner.

After the story broke, Oxendine announced he was returning the money. The State Ethics Commission is investigating the donations.

Oxendine said state law requires Georgia-based insurers be on the association board, and at least one must be a mutual insurance company. He said Yancey’s primary insurance company, State Mutual Insurance Co., is the only Georgia-based mutual insurance company.

“They’ve always been on the board,” he said. “There’s no way to take them off.”

Georgia law states, however, that the board simply needs two Georgia-based insurers. It does not specify what type and it does not require that a local company executive be chair.

Another Georgia-based company, Life of the South from Valdosta, has a member on the board, but that person has never served as chair.

Oxendine told the AJC, “I don’t appoint individuals. I appoint companies.” State law stipulates, however, that Oxendine appoints individuals to the board from company recommendations. It states the commissioner picks the chairman and that the association is under the “immediate supervision” of the commissioner.

The law states the commissioner can remove any board member if “in his judgment, the public interest may so require.”

Asked to clarify apparent discrepancies between Oxendine’s remarks and state law, spokesman Glenn Allen provided no comment. The AJC asked, through Allen, for Oxendine to address apparent discrepancies. He did not do so.

Yancey has headed the board since 1999, when his father, Delos Yancey Jr., retired from the position. The chairmanship, and all the board posts, are three-year, unpaid positions.

The association, set up as a safety net for the insurance industry, manages the operations and assets of troubled insurance companies to make sure consumers don’t lose out on their policies.

By state statute, the association can raise millions from insurers, take over assets of troubled insurers and assume policies of failed insurers. As of 2006, the most recent data available, the association reported assets of about $140 million.