Colorado House Bill 10-1012 was introduced on January 13th, 2010 by freshman representative Sal Pace (email) of the House of Representatives in District 46 which serves Pueblo, Colorado, and by Morgan Carroll (email) who is a State Senator in District 29, which serves Aurora, CO. Senator Carroll is also a consumer and civil rights attorney in a local mother-daughter law firm. The complete bill history is available through the Colorado General Assembly.
HB10-1012 was actually created from a scenario where Pinnacol Assurance, a quasi-state powered mutual insurance company and workers compensation policy provider was perceived as having excessive surplus reserves that could help to cover Colorado budget short-falls. The surplus reserves ran in excess of $575 million in 2009. Initially designed as a last effort for Workers Comp claims, the company now serves 54,000+ policyholders representing 57% of the market for business Workers Comp insurance in Colorado; clearly a large piece of the pie.
Legislators questioned how the insurer had gained such high reserves and felt that they were wrongfully obtained when Pinnacol didn’t openly donate some of the money to the State. This caused the creation of an interim committee to study the insurers business and the beginning of this legislation.
Democrats imposed interest in trimming the fat from Pinnacol while the Republicans heavily opposed interference in what they perceived as a private business matter. We have not heard where Libertarians stand on this issue.
Kenneth Ross, President and CEO of Pinnacol, argues that the reserves belong to policy holders, particularly since Pinnacol is a private insurer. Several politicians tried to influence the payment of larger dividends to policy holders which ultimately caused Pinnacols board of directors to tender up a February 2010 offer of $200 million to separate from the state. The new offer is $330 million dollars as of March 19th, 2010 and it doesn’t come without some attachment. The company has paid out $345+ million in dividends over the five years to its policy holders which tells us, combined with their reserve figures, they have become a bit of a monster that the State isn’t sure how to handle. The offer from Pinnacol remains with their wish to keep the 501(c)(27) tax exempt status and PERA (Public Employee Retirement Association) status, among other privileges. Of course, it seems understandable that the company does whats best for its shareholders and policyholders alike.
The bill passed a Third Reading in the House of Representatives on March 8th and was introduced into the Senate on March 11th, 2010 where it remains in committee as of March 26th, 2010. HB-1012 is summarized in the section of this report titled “What the Bill Changes”. The State Senate vote will likely occur sometime before May 10th, 2010. Other Senate bills have spawned as co-legislation to this bill and refer to the medical examiner and administrative guidelines for operation of the bill, however, for the sake of practicality those are being left out from our review.