New Rules to Make Colorado’s Workers’ Comp Company Transparent
As of July 1, 2010, three bills aimed at making Pinnacol Assurance, Colorado’s workers’ compensation insurance fund, more transparent and accountable to taxpayers and policyholders take effect.
Pinnacol Assurance is a state-chartered workers’ compensation fund of last resort, meaning that Colorado businesses unable to secure workers’ compensation for various reasons can obtain the required insurance from Pinnacol. Despite its purpose as a last measure for troubled businesses, Pinnacol has garnered about 57 percent of the workers’ compensation market in the state.
The reason for the legislative action was due in part to high demands for more translucent operating procedures within the insurance giant. In April 2010, an audit review found that the board of directors inconspicuously approved generous “Golden Parachutes” for its executive officers in the event the company was privatized. There was concern that the board, appointed by the governor and confirmed by the Senate, was “in bed” with the very entity it was obligated to oversee. Furthermore, Colorado lawmakers wanted more strict state control over Pinnacol after complaints surfaced about how the company treated injured workers and competitors. A series of bills were subsequently passed to address these concerns.
Senate Bill 11 prohibits any possible financial incentives aimed at encouraging or denying benefits to injured workers. It also prohibits the company from denying workers’ benefits to the widows and children of workers killed on the job.
Senate Bill 13 requires that workers are surveyed after their claims have been processed to measure their levels of satisfaction. The company’s chief executive must now issue an annual report to the governor and to other committees.
House Bill 1002 mandates that Pinnacol post the time, date and location of each upcoming board meeting on its website at least seven days before the meeting in order to prevent the board from making decisions in semiprivate meetings similar to the one that led to the previous controversial executive pay resolution.
This past year, Pinnacol Assurance attempted to make itself a private workers’ compensation insurer by offering $330 million to the state of Colorado in exchange for the conversion. The General Assembly rejected the proposal amid concerns over the company’s operations and comments from legislators that considered the offer nothing shy of a bribe.