Editorial: Colorado needs road map for Pinnacol's future after no-sale

By THE VOICE OF AURORA
The Aurora Sentinel
Thursday, April 1, 2010
http://aurorasentinel.com/articles/2010/04/01/opinion/editorials/doc4bb4d19ecbce5276491325.txt

State officials need to search out Plan "B" in how best to deal with Pinnacol Assurance after Gov. Bill Ritter announced this week that any hopes of selling the state-sponsored insurance giant have ended at least for now.

Ritter and state lawmakers have been toying with the idea of selling the quasi-public company for hundreds of million of dollars to help offset a massive hole in the state budget.

Pinnacol is a quasi-private insurance company created by the state to offer injured-worker insurance for companies that want it, mostly those who can't find it anywhere else. In many ways, Pinnacol operates like most mutual insurance companies. Those who sign up pay premiums that vary depending on the number of employees they have and the type of work employees do. Office-type business traditionally pay relatively low premiums. Roofing companies and restaurants pay higher premiums, where cut fingers and broken bones aren't out of the ordinary.

It was those companies that prompted the state to create the company in the first place. For decades, high-risk businesses were simply unable to find an insurer to cover potential employee injuries, or if they could find one, the policies were unrealistically expensive. So the state created what is now known as Pinnacol as an insurer of last resort.

It turns out that the state was so successful in offering low-cost, "profitable," quality worker compensation policies that other Colorado businesses wanted in on the system. It's led to the largest worker-comp insurance company in the state, which regularly offers the cheapest rates, even as they rise.

Over the years, these premiums have risen right along with all health related insurance products. While the cost of state-mandated workers' compensation insurance was recently a consistent topic of complaint among business owners, grumbling has leveled off in recent years.

That's due in part because Pinnacol has "returned" some premium money to policy holders.

These regular Pinnacol reimbursements actually represent money the businesses were overcharged. This successful marketing campaign, however, has many business officials singing the company's praises rather than demanding a change in premiums.

But what drew the most attention to this odd government agency is the $684 million largess Pinnacol has amassed in the past few years. Even by conservative estimates, the mountain of money is more than twice what any other insurance company would be required to keep.

Some state lawmakers have touted that the nest egg represents prudent fiscal policy, but it more likely is a testament to how seriously policy holders have been overcharged.

State Sen. Morgan Carroll suspects that the largess represents a company that works too hard to provide rebates to businesses and not hard enough to provide care and benefits to injured workers. It appears she'll be successful in her drive to reform the insurance company and ensure that at least one member of the board of directors will be an injured worker. Carroll will also likely be successful in ensuring that the state restrict how the company uses surveillance and other clandestine methods to try and prove that injured workers are faking it.

Both sides provided shocking instances where either workers were clearly uninjured and falsely claiming benefits, or injured workers are being harassed and cheated by insurance-company paparazzi.

Here's one instance where it's important for the state to ensure that, above all, Pinnacol pay workers injured on the job what they're due. Just because an injured worker isn't trapped round the clock in a wheelchair and as helpless as Stephen Hawking doesn't mean that an injury suffered while working doesn't diminish the quality of a worker's life for the duration. Such a depraved policy says that even if an injured worker find pleasure in something for the rest of their lives, they can never publicly show it for fear of losing benefits.

It's a shameful way for any agency to operate, and it's intolerable that the state would sanction such a company.

State lawmakers were right to scrutinize the dealings of Pinnacol. We still maintain that a regulated sale of Pinnacol with a host of caveats wold have benefited state taxpayers, businesses and employees injured on the job in the future, but given the unlikelihood of such a move, it's important for the state to exert more control and scrutiny to ensure everyone touched by this company is treated equitably.

Printable Version of this Page