Colorado Gov. Jared Polis wants to spin off the state’s stake in Pinnacol Assurance, privatizing the workers’ compensation carrier of last resort to help it make more money and plug government budget holes.
The big idea is that pulling up stakes from the quasi-governmental insurance company would help the state’s ailing budget. The governor is proposing roughly $630 million less in general fund than the current spending plan, according to reporting from Colorado Politics.
“Spinning it off from the government would allow the state to recoup its investment in the business at a time when budget writers need to fill a budget hole that, as of a Dec. 19 projection, is estimated at $672 million,” the Denver Post is reporting. “That gap for the coming fiscal year, which starts July 1, would rise beyond $1 billion if lawmakers opt to set aside the entire $350 million mandated for a new law enforcement fund by a successful November ballot initiative.”
This is the third time in a decade that state leaders have put forth the idea of privatizing Pinnacol. Lawmakers have yet to express enough support or opposition to get a handle on what the proposal’s chances are, possibly want more details before committing to the move, several Colorado media outlets are reporting.
Pinnacol provides workers’ comp coverage to more than 50,000 businesses in Colorado.
Polis’ plan calls for the state to take $100 million a year from the Pinnacol for five years to cover the state’s work in creating the entity
“Pinnacol has been struggling with regard to how they can engage with employers in a changing world,” Polis recently told the media. “We want to make sure that we can future-proof and reform Pinnacol.”
A privatized Pinnacol could offer insurance across state lines and sell coverage on the open market for additional revenue to help the carrier remain solvent.
Lawmakers created the workers’ comp carrier in 1915 and exempted it from state and federal taxes that other insurers pay to offer workers’ comp policies to all Colorado companies, including those deemed too high-risk by the private market.
Its structure limits Pinnacol’s to selling policies only in Colorado and selling only workers’ comp plans, two restrictions that now are costing the company business, according to the Colorado business publication the Sum & Substance.
Topics Workers’ Compensation Colorado