Posted: August 01, 2010

Guest column: Colorado’s safety net for business

Paul Suss

Family Health West, a nonprofit health-care provider in Fruita, once had an accident rate three times that of comparable businesses. Today, that rate has declined more than 70 percent.

Errol Snider, the company's chief operating officer, says its workers' compensation insurance company deserves the credit, the result of spending thousands of hours providing training and support.

What insurer would devote that much time and attention to one customer? Pinnacol Assurance.

Pinnacol insures nearly 55,000 policyholders, protects the lives of nearly 1 million Colorado workers and is a stabilizing force in the state's workers' compensation market. The company's 91 percent customer retention rate is testimony to its passion for and commitment to protecting policyholders and their injured workers and families.

Originally known as the State Compensation Insurance Fund (SCIF), Pinnacol was created by the Colorado Legislature in 1915 and mandated to provide affordable workers' compensation coverage to Colorado businesses and to pay benefits to injured workers and their families. The company also was required to serve as the insurer of last resort, providing a safety net for businesses that could not obtain insurance from other private insurers.

In the last year, Pinnacol was the subject of legislation and an interim committee study. With that attention came numerous misconceptions regarding the company's finances, operations and its relationship to the state of Colorado. As a business owner, Pinnacol policyholder and a member of the Pinnacol board of directors, I want to set the record straight.

Not a state agency

The law clearly states that Pinnacol is not a state agency. It mandates that Pinnacol operate as a domestic mutual insurance company. Therefore, the comparisons to state agencies and their operating procedures are not pertinent. Pinnacol receives no tax dollars. Its revenue comes from two sources: the premiums paid by the businesses it insures and from its investments. The company is exempt from Colorado's insurance premium tax because it is the insurer of last resort.

Helga Grunerud, executive director of the Hispanic Contractors of Colorado, says offering coverage to hard-to-insure businesses is good for the economy: "Many of our small contractors would not be in business and providing good paying jobs to Colorado workers were it not for Pinnacol."

Pinnacol is a success story. That success translates to jobs and stability for Colorado businesses.

"Pinnacol has lowered rates more than 50 percent in the last five years, saving Colorado businesses over $238 million," said Mark Larson, executive director of the 212-member Colorado Petroleum Marketers Association. "Since 2005, it has issued general dividends totaling nearly $394 million. That money has helped many businesses that are struggling in this economic slowdown."

Thanks to a strong business plan, Pinnacol is financially sound. Its surplus - money set aside to cover catastrophic events, medical inflation and to weather economic uncertainty in the investment market - is appropriate for a company that sells only one line of insurance in only one state and cannot raise capital. The company must ensure that its reserves and surplus are adequate to pay claims that can extend for decades.

Handling claims with compassion

Pinnacol's record of claims handling is both exemplary and compassionate. A May 2009 audit by the Colorado Division of Workers' Compensation revealed that Pinnacol's compliance across all categories tested was 91 percent to 100 percent.

Just ask Jandale Carter, who lost her husband, Barry, in a work-related accident. "I knew without Barry's income we would suffer," she said. "Pinnacol changed all that for us. Not only did they walk me through the benefits and what would happen next, they took the time to reassure me that we would be OK."

Pinnacol is charting a course to achieve an extraordinary vision - to be the best workers' compensation company in the nation. As a board member, I am proud of the way the company conducts business - keeping rates affordable and demonstrating care and compassion for those it serves.

While recent audit findings have pointed to areas where the company can improve, let there be no mistake, Pinnacol is a success, and that success benefits Colorado business and their employees.
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Paul Suss is president and general manager of Suss Buick GMC and chairman of the Pinnacol Assurance Investment Committee.

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