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Colorado: Insurer says proposals would increase oversight, change firm
Officials from Colorado's largest workers' compensation provider recently voiced their concern about legislative proposals that would increase oversight and overhaul the management of the state-chartered, but independently run and funded insurance firm.
The Pinnacol Assurance board of directors rejected five of the seven bills recommended by an interim legislative committee that examined the role and operation of the company. Lawmakers held hearings to examine charges that Pinnacol amassed large reserves, overcompensated its executives, and spent lavishly on entertainment while denying injured employees' claims. At the conclusion of the hearings in late October, the committee voted to move forward with seven bills when the Legislature reconvenes in January. The legislation would boost fines for improperly denying claims, increase transparency, and set limits for Pinnacol's surpluses, among other things.
"These bills have the potential to drive up workers' compensation costs in Colorado, and others are redundant, as well as an inappropriate intrusion of the legislature into the operations of a company that, by statute, is directed to operate as a mutual insurance company," Johnson said. Pinnacol's concerns. Specifically, Johnson said the company is taking issue with provisions in the bill sponsored by Rep. Su Ryden, D-Aurora. That legislation would limit Pinnacol's surplus to 800 percent of risk-based capital and require the company to issue dividends to policyholders if the surplus surpassed that level. Johnson said the bill would hinder Pinnacol's ability to be effective in the marketplace, that the percentage of risk-based capital written in the bill is arbitrary, and that there is no such standard in the workers' comp industry. "This bill is dangerous," he said. "The board, which is appointed by the governor and confirmed by the Senate, is charged with making decisions regarding rates, surplus levels and dividends, and this bill inappropriately limits our authority. Johnson also said that the bill sponsored by Rep. Joe Miklosi, D-Denver, is not needed because the current board structure is working well. The legislation includes language that would add two nonmanagement employees to the group. Johnson said Pinnacol is a multibillion dollar company, and board members need experience and expertise in order to make critical business decisions. In addition, he said the board is also concerned that adding the executive director of the Colorado Department of Labor and Employment could create a conflict of interest because the department oversees workers' comp in the state. "The bill is a backdoor attempt to make Pinnacol a state agency by imposing a public testimony provision," Johnson said. "Stakeholders with concerns have access to Pinnacol board members and to management through other means, and Pinnacol is already subject to open meeting laws. This bill does nothing to further the transparency of Pinnacol's operations. The company already has more oversight by state regulators and legislators than any other insurance company in Colorado." Despite its opposition, Pinnacol's board voted to support two pieces of legislation, including a bill sponsored by Sen. Mary Hodge, D-Brighton, to increase accountability and the workers' comp claims process brochure bill sponsored by Miklosi. Read more at the WORKERSCOMP ForumTM homepage. January 7, 2010 Copyright 2010© LRP Publications |
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