Colorado Senate committee rejects Hickenlooper's Pinnacol appointment
Denver Business Journal by Ed Sealover, Reporter
May 8, 2012
In a highly unusual move, a Colorado Senate committee unanimously recommended against approving one of Gov. John Hickenlooper's newest appointments to the Pinnacol Assurance board late Tuesday.
The panel questioned whether she is too closely connected with her former employers at the state-chartered workers' compensation insurer at a time when Pinnacol is pushing a controversial privatization plan.
The full Senate is expected to vote Wednesday on the appointment of Marcia Benshoof, a former executive at Pinnacol, who has been serving on the Pinnacol board since January.
But if it holds to the Senate Judiciary Committee recommendation, it will make the extremely rare move of rejecting a gubernatorial appointee — a move made all the more exceptional by the fact that Hickenlooper and the chamber-controlling Democrats hail from the same party.
Both Republicans and Democrats on the committee questioned whether Benshoof could be an objective and independent board member, given her ties to the company and her stated support for privatizing Pinnacol.
She replied that, after working at Pinnacol from 1998 to 2009, including in the role of chief business officer, she felt that the experience would make her "more objective and able to challenge the executive team because I know more what's going on there."
But state Sen. Ellen Roberts said she could not reconcile Benshoof's stated plans to serve as vice chairwoman of a board committee to do outreach to Pinnacol policyholders on the privatization proposal later this year with her seeming "absolutely convinced that privatization is the way to go."
And Sen. Morgan Carroll, D-Aurora, said she was concerned that the Pinnacol board in the past has faced problems because it was not strong enough to be independent from the insurer's administration.
"There's no question you have a lot of experience here," Carroll told Benshoof. "But having been part of Pinnacol's team for 11 years, I'm wondering how you can be sure not to be a rubber stamp for what Pinnacol wants."
The committee voted 7-0 against recommending Benshoof for appointment.
Meanwhile, committee members voted 6-1 to recommend the appointment of Jeff Cummings, owner of Duffy Crane and Hauling of Henderson, to the board. Cummings, like Benshoof, already has served on the board for several months.
Both Benshoof and Ken Ross, Pinnacol president and CEO, expressed shock at the vote afterward.
"Marcia was appointed by the governor to be the insurance expert," Ross said, noting that she officially was filling the required role of a board member who has experience in the management and operation of insurance companies not competing with Pinnacol.
"There's no one better in the state to serve in that capacity, in my view," Ross added.
Pinnacol's board proposed a plan in November that would allow the company that now serves 55,000 Colorado businesses to privatize itself and expand into other states in exchange for giving the state preferred stock equal to $340 million — about 40 percent of company value.
But a task force made up largely of business leaders pilloried the plan, saying it felt it would cause policyholders' rates to rise and service to go down.
Colorado now has the fifth-lowest workers' compensation rates in the country, and Pinnacol writes policies for about 57 percent of state businesses.
Pinnacol then received criticism from a variety of sources for acknowledging that it had spent roughly $3.5 million in legal, lobbying and investment-bank consulting costs on its latest bid for privatization.
State Sen. Steve King, R-Grand Junction, continued that criticism at Tuesday's hearing, saying: "Coming out of the largest and deepest recession of our lifetime, I have a very deep concern that that is not in the best interest of policyholders."
The Senate floor debate on the appointments of Benshoof and Cummings will take place Wednesday on what is the last scheduled day of the 2012 legislative session.
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