Insurance workers contribute millions to Oxendine

Critics say practice is legal but suggests a conflict of interest

Georgia Insurance Commissioner John Oxendine has sustained his 14-year political career substantially on contributions from people who for work for companies his office regulates, records show.

Of the $6.6 million his campaigns collected from 1998 to 2008, at least $2.6 million came from employees and owners of insurance and small-loan businesses, according to a review of state reports by The Atlanta Journal-Constitution.

That's at least 40 percent of what Oxendine, a leading candidate for governor in 2010, has raised. And it's a conservative figure.

It does not include law firms working in the industries he regulates who have been major contributors. And during much of the past decade, Oxendine's campaign did not disclose the occupations and the employers of many donors, making that information hard to track.

Oxendine said the contributions don't influence how he does his job. And he said he hasn't put pressure on insurance executives, agents, actuaries and others to contribute to his campaigns.

"What we've always done is strictly comply with the law and we've made every attempt to do so," Oxendine said.

Lawmakers, political opponents and others have questioned whether taking such donations has compromised Oxendine's ability to fairly regulate insurance in Georgia.

"It is a conflict of interest for a regulator to accept money from people they are charged with regulating. It's a no-brainer," said Allison Wall, executive director of Atlanta consumer

group Georgia Watch. "You can say money doesn't effect your decision-making process all day long, but Oxendine has been in that office for four terms and I think the lines have gotten blurred."

Under state law, it is illegal for officials to take money directly from companies they regulate. However, it is legal for officials to accept money from individuals who work in those industries.

The records suggest that most of Oxendine's insurance-related contributions came from individuals. Last week, however, the AJC reported that two Rome-based insurance companies, both headed by Delos "Dee" Yancey III, funneled $120,000 to Oxendine's campaign for governor late last year using 10 political action committees in Alabama. Georgia and Alabama records showed the money went from insurance companies to the PACs, which then made donations directly to Oxendine's campaign.

The Georgia Ethics Commission has opened an investigation. Oxendine has said he believed the money came from multiple donors in Alabama, and he said he would give back the money pending the commission's investigation.

Oxendine isn't the only state official in Georgia who has accepted contributions from people who work in regulated industries.

For instance, during the final months of his most recent re-election campaign, longtime Agriculture Commissioner Tommy Irvin, a Democrat, collected more than half of his big-money contributions from people working for businesses that his department regulates or political action committees in those industries. The office of Secretary of State Karen Handel, another GOP candidate for governor, provides administrative support for boards that issue professional licenses and registers businesses. Handel has accepted contributions from people licensed by the boards and from businesses, but she does not regulate companies and the licensees in the same way as the insurance commissioner.

Oxendine, who has raised more money than any insurance commissioner in state history, has long been the target of criticism for industry fund-raising.

Guy Drexinger, a Democrat who lost to Oxendine in 2006, tried to make the commissioner's industry contributions an issue.

"We had looked at campaign disclosures, and I saw all that money coming in," he said. "You're taking money directly from the executives of companies that you are regulating, and I don't think that's the right thing to be doing. It can lead to one being influenced."

Drexinger asked Oxendine to sign a pledge against taking money from industry employees. Oxendine declined. In the two years leading up to the election, Oxendine collected twice as much money from insurance and small-loan employees as Drexinger took in from all sources. He outspent his challenger almost 5-to-1.

As commissioner, Oxendine wields tremendous power over the 1,600 companies that sell insurance in Georgia. He reviews rates and, in some cases, decides how high they can be. He licenses the state's 137,000 agents and investigates complaints against companies. If they break the rules, he can levy fines or even bar them from doing business in Georgia.

His office also licenses and regulates small-loan businesses. The more than 1,000 offices he licenses provide consumer loans of no more than $3,000.

Most states avoid the issue of insurance regulators raising money from the people they regulate.

Only 10 other states besides Georgia allow voters to elect insurance commissioners, according Vanessa Sink of the National Association of Insurance Commissioners. In most other states, they are appointed by the governor. Sink said she doesn't know how many of the elected commissioners were allowed to take contributions from the industry they regulate.

The AJC review of Oxendine's campaign reports found that besides insurance and small-loan money, most of the money that could be traced came from lawyers, doctors in medical groups and real estate developers. Figures show that in some years, donations from people working in the insurance and small-loan industry accounted for more than 50 percent of all the money his campaigns received.

That money, coupled with a knack for getting his face on TV and name into newspapers, has made Oxendine one of the best-known Republican politicians in the state.

A poll by Atlanta-based InsiderAdvantage last week put Oxendine at the top of the Republican pack in the governor's race. His own campaign has declared him the front-runner.

In 1994, Oxendine was a political unknown when he ran as a Republican against incumbent Democrat Insurance Commissioner Tim Ryles. Ryles had come into office in 1991 as a crusader against high auto insurance premiums, promising not to let companies raise rates during his term.

Ryles' tactics angered insurance companies, but few gave Oxendine a chance of unseating him. Oxendine worked hard, and he got the break he needed: 1994 was a huge year for Republicans as voters threw out Democrats across the country.

Oxendine quickly developed a reputation for being an aggressive fund-raiser, piling up record amounts in his re-election campaign accounts by collecting donations from insurance agents and executives, small-loan company owners, health care officials and law firms.

The big money helped scare away political opposition and paid for dominant advertising campaigns come election time. Since winning in 1994, he's faced limited opposition and won general elections with 59 percent, 64 percent and 65 percent of the vote.

Oxendine told the AJC last week that insurance agents and executives have a free-speech constitutional right to donate. And he said he got re-elected three times because of the good job he's done in office, not because of industry money.

"The ability to get elected is with the consumer, insurance consumers," the commissioner said. "Regardless if I am nice or mean to the insurance company, the insurance company does not effect enough votes to get me elected or defeated."

His contributors say Oxendine has provided a "level" playing field" for insurance companies and that he hasn't promised anything in return for campaign money.

Jill Jinks, CEO of Marietta-based Insurance House, and her family have contributed more than $30,000 to Oxendine campaigns in the past decade. Despite the money, she said Oxendine once levied a fine of about $200,000 against the company for breaking the insurance agency's filing rules.

"He's asked us for contributions, but there has never been any suggestion of a quid pro quo," she said. "If there was a quid pro quo, he would have just waived that fine."

Wesley C. Duesenberg Jr., president of Southern Insurance Underwriters, has contributed about $22,000 to Oxendine campaigns and calls him a "fair and unbiased regulator."

In terms of his fund-raising tactics, Duesenberg said, "I wouldn't say he's any more aggressive than [U.S. Sen.] Johnny Isakson or [U.S. Rep.] Tom Price or something like that. They have to be aggressive to a degree."

Public criticism of Oxendine within the industry is scarce. When asked about Oxendine, longtime state Sen. George Hooks (D-Americus) said he could not say much because he runs an insurance agency and the commissioner's office licenses him to do business. Several insurance agents and doctors who contacted the AJC last week declined to comment on the record.

Lawmakers have battled Oxendine for years. His office's budget has taken hits, with the Senate this year trying unsuccessfully to eliminate his consumer affairs division.

Last year lawmakers approved legislation allowing companies to raise auto rates without Oxendine's prior approval. A similar policy in the 1980s led to increased auto premiums. Oxendine decried the law, saying it would lead to big increases for drivers.

But lawmakers who supported the change argued Oxendine was worried the move would eliminate a major reason for auto insurance companies to give to his campaigns. Sen. Cecil Staton (R-Macon), whose bill was amended to include the "no-prior approval provisions," said at the time that Oxendine "is ultimately concerned about his influence and his power and the power he wields over the insurance companies of this state."

Wall, the consumer advocate, said lawmakers were concerned Oxendine had been linking

rate approvals with financial

support.

"Members of his own party were determined to put a stop to it," she said. "They wanted to put an end to the shake-down tactics they perceived were happening."

Oxendine said he opposed the bill because it "deregulated auto insurance rates, eliminating long-standing consumer protections."

The bill passed.