Colorado Gov. Jared Polis is again proposing to privatize state-affiliated workers’ compensation carrier Pinnacol Assurance, aiming to generate $400 million in proceeds to support the state budget.
In his budget letter to lawmakers, Polis said Colorado would follow the lead of other states that have recently mutualized, privatized, or taken other measures to uncouple previously state-chartered funds. The governor had called for similar measures during last year’s budget process.
Privatizing Pinnacol, Polis said, would allow the carrier to diversify and balance its consumer base, leverage economies of scale, and access larger multistate risk pools, BestWire reported.
“As the workplace has evolved to include more workers who work remotely and across state lines, Pinnacol faces challenges to its business model,” Polis wrote. “For example, under Pinnacol’s current structure, it is prohibited from providing insurance policies that cover workers outside Colorado, which hampers the ability of Colorado businesses with out-of-state employees to obtain affordable, high-quality workers’ compensation coverage.”
Polis noted that the idea of spinning off Pinnacol has been discussed in Colorado for decades, but now is the time to act. Failure to privatize, he said, could lead to lost market share, higher premiums, and reduced benefit levels.
Carole Walker, executive director of the Rocky Mountain Insurance Information Association, said lawmakers must ensure Pinnacol operates on a level playing field with other carriers if privatization proceeds. Pinnacol is currently exempt from paying premium taxes.
“If they are truly privatizing and become a for-profit entity, what does that look like for paying premium taxes and contributing to the guaranteed fund?” Walker said. “From our perspective, those are important questions when moving any kind of privatization plan forward.”
Pinnacol Assurance holds a Best’s Financial Strength Rating of A- (Excellent). According to BestLink, the five largest writers of workers’ compensation insurance in Colorado in 2024, based on direct premiums written, were: Pinnacol Assurance, 48.83%; Hartford Insurance Group, 6.36%; Zurich Insurance US PC Group, 4.25%; Travelers Group, 4.06%; and Chubb INA Group, 4.0%.
