Since 1915, Pinnacol Assurance has existed in Colorado as a state-chartered insurance company, and it is currently responsible for processing all workers’ compensation claims filed in the state. Recently, however, Pinnacol has offered the state $200 million to claim its autonomy.
The Associated Press reports that Senate Majority Leader Brandon Shaffer is against the privatization of Pinnacol Assurance. Many of the state’s representatives are concerned that, even though Pinnacol would continue to handle workers’ compensation in Colorado, the change might have a negative effect on employees’ rights.
Further compounding the dissension is the fact that, according to an independent analysis from Morgan Stanley, Pinnacol Assurance is currently worth nearly $400 million to the state of Colorado. “Selling” the company for its autonomy at $200 million would constitute a considerable discrepancy.
If the Senate approves the sale, Pinnacol has agreed to give up its tax-exempt status except in the workers’ compensation accounts it retains. This would mean an increase in revenue for the state of Colorado on top of the sale price.
The advantage for Colorado in the deal is that the sale of Pinnacol Assurance would help decrease the impact of the budget shortfall for next year, currently estimated at over $700 million.
A previous attempt to privatize Pinnacol failed in 2001, and it seems that many legislators are against the proposed deal. However, if the offer is accepted, Pinnacol would pay $75 million this year, an equal amount the year after that, and another $50 million spread out over the subsequent 30 years.