Colorado: Lawmakers drop plan to siphon funds from WC insurer
Additional legislation that would have given the state more control over Pinnacol Assurance -- the Colorado-chartered but independently run and funded insurer -- also failed to gain muster.
In early April, legislators in the Colorado Senate floated a plan that would have taken $500 million from Pinnacol's reserves to balance the state's projected budget shortfall for the coming year. However, lawmakers withdrew S. 273 after Gov. Bill Ritter Jr. indicated that he wouldn't support it.
"One idea to help ease the remaining $300 million budget shortfall was to tap into surpluses held by Pinnacol Assurance, the state's largest workers' compensation insurance company," he said. "Members of my staff and I have tried in good faith to reach an agreement with Pinnacol. However, there remain too many unresolved issues and questions for Colorado citizens and Pinnacol shareholders and customers."
Attorney General John Suthers also issued an analysis of the legislation concluding that "because Pinnacol's funds are not assets of the state and Pinnacol's policyholders have vested rights in any surplus funds, seizing them would violate the Colorado Constitution." Republican lawmakers also warned that the move would have been tantamount to nationalizing a private company. They said the seizure could have destabilized the company, which provides workers' comp coverage to nearly 60 percent of all employers in the state.
Ritter, however, said he wouldn't rule out tapping into the insurer's surplus to potentially issue a refund to Pinnacol's policyholders.
"For the long-term, I believe we must examine Pinnacol's legal and financial structure, its unique status as a nontaxable, state-created entity, and all aspects of the legislation that governs Pinnacol," he said. "This includes a financial and performance audit, an actuarial analysis of Pinnacol's value and surplus, and a possible refund to its policyholders."
Companion legislation, S. 281, was also introduced. That bill was aimed at giving the state more power over Pinnacol. Specifically, the bill would have repealed certain statues granting Pinnacol authority to engage in activities as if it were a mutual insurance company, required performance audits, and called for a study of further potential changes, such as selling the insurer. That bill, sponsored by Rep. Paul Weissmann, D-Louisville, failed to move forward after several members of his own party came out against measure.
May 7, 2009
Copyright 2009© LRP Publications