Colorado Robbing Pinnacol Assurance to Bail Out Budgeting Problems

Well there you have it! Pinnacol Assurance, a successful Colorado workers compensation state fund, is being used to help bail out State of Colorado budgeting problems! Check out Colorado Workers Compensation Rules and Benefits here.

Pinnacol Assurance, a division of the State of Colorado, has achieved a reported reserve of $700 million. According to some, way more than it needs to assure injured Colorado workers get future claims paid. On one hand, good news in that this government established insurer has operated successfully as evidenced by achieving financial security for the State of Colorado employers and employees. On the other hand, bad news in that it's success has put a big bulls eye on its front door for Colorado legislators.

A quick lesson in simple terms; Insurance company reserves or surplus, are comprised of the money left over after premiums are paid by employers, claim and claim expenses are paid and operating expenses are paid. Simply, it's the money held back for the future.

So just who's money is it anyway? According the the State of Colorado, it's theirs, and I'm sure if you look closely you'll find they're right. Well, let's think about that; Who paid the premiums that generated the $700 million excess? Was it the State of Colorado? I bet not. Sure they certainly had a hand in establishing Pinnacol Assurance, but it was established to provide a solution and it did. Let's see, how about those Colorado employers? Yep. Those are the folks who bought the insurance, paid the rates and helped reduce claims leading to the excess.

If Pinnacol Assurance has such an excess surplus, wouldn't it be right to return part of that money to the employers who created it in the first place? So if I was a Colorado employer, I'd be a little upset that the state decided to take part of this reserve and use it to cover it's poor budgeting practices.

What's this mean for the future of other workers comp state funds? Could your state fund do this? More about that in future blogs!