Pinnacol Wants to Go Private
Colorado’s largest carrier of workers’ compensation insurance, Pinnacol Assurance, has sent a proposal to Governor John Hickenlooper in hopes of being allowed to go private. KUNC’s Brian Larson spoke with Northern Colorado Business Report Publisher Jeff Nuttall for more.
Larson: Pinnacol Assurance, right now, operates as a quasi-governmental agency – and many business organizations are concerned about this effort to become a private entity. What exactly was in the proposal sent to the Governor?
Nuttall: The basic premise of the proposal is that Pinnacol would like to privatize, becoming a mutual insurance company and eventually a stock insurance company, divesting completely from the state. This move would, in part, mean that it will no longer receive the tax break it has enjoyed and that it will be able to do business in other states.
Larson: I guess the big question in all of this is exactly what would that mean to business owners around the state?
Nuttall: The biggest worry is that rates might go up. The governor has assembled a task force of industry professionals and others with a stake in the matter to collect the facts and submit a recommendation. Another concern is that changing the workers’ compensation structure in Colorado would mean fixing something that isn’t broken. Colorado has the fifth-lowest rates for workers’ comp in the nation. Also, groups like the Northern Colorado Legislative Alliance are unsure of what sorts of changes may be ahead for policyholders. There is a statement in the proposal that says privatizing will “clarify the value of policyholders,” but no one is completely sure what that means.
Larson: What kinds of companies have the most at stake with this issue?
Nuttall: Construction and other related companies have a lot at stake here, because of the sometimes dangerous nature of their jobs. Several of the members of the governor’s task force on the matter are from organizations that represent those industries. However, all businesses should take note of the changes associated with this proposal. Increases in premiums will affect all business, not just those with high-risk jobs.
Larson: Why does Pinnacol want to go private? Are they not doing well financially?
Nuttall: It’s just the contrary Brian. In fact, at the height of the recession, in 2009, the Colorado Senate attempted to raid $500 million from Pinnacol’s surplus. However, stakeholders in Pinnacol have a vested interest in that surplus, and taking it would have violated the state constitution.
Larson: What do you think the state legislature might do about this during the legislative session?
Nuttall: Pinnacol is hoping to put together and distribute a legislative package in February or March, but no sponsor of legislation has been announced. The task force has held a couple of meetings and will hold two more in January before submitted a recommendation to the governor. Whatever happens, a lot of business interests are ready to take action.
Larson: Jeff Nuttall is the publisher of the Northern Colorado Business Report.