A state-ordered audit this spring found that Colorado workers’ compensation insurance firm Pinnacol Assurance failed to properly file details of its rating system. The insurer had been using two unspecified factors in the way it set its rates. It had been doing so since 2002.
Colorado Division of Insurance (DOI) Commissioner of Insurance Marcy Morrison stated that “it’s important that the Division of Insurance maintain its vigilance to be sure that rates are not excessive, inadequate or unfairly discriminatory.”
Pinnacol Assurance is Colorado’s largest workers’ compensation insurer. It is partially owned by the state, making it a quasi-governmental agency, and it is an insurer of last resort for many businesses. Some of its clients, therefore, may not have felt they had the option of challenging the rates that had been set by the insurer.
To make up for rates it charged some of its customers, Pinnacol will credit at least $15 million against this year’s premiums. Only schedule-rated customers are eligible for the credit. Pinnacol will no longer use the rating factors in question.
In addition, Pinnacol will pay the government $80,000 in fines. This represents $10,000 for each year the company based fees on the unscheduled rating factors.
Pinnacol has taken responsibility for the error, hiring a director of corporate compliance to ensure that this does not happen again. The director will be responsible for Pinnacol’s DOI filings and its overall regulatory compliance.
After the DOI made the settlement agreement with Pinnacol, it canceled the scheduled hearings on the matter.