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Colorado’s state-chartered workers compensation insurer, Pinnacol Assurance, will ask the Colorado Legislature next year to allow the company to sell comp policies outside the state.
In its second effort to change its business model, Denver-based Pinnacol plans to submit a proposal in early 2016 that would form a yet-to-be-named for-profit subsidiary to sell workers comp coverage in other states and the for-profit entity would not be limited to Colorado companies doing business outside the state, a Pinnacol spokeswoman said.
She said the plan would not privatize Pinnacol, which is the workers comp insurer of last resort for Colorado and is classified as a state “political subdivision.”
The insurer still operates under rules from the company’s founding in 1915, which say Pinnacol can sell workers comp coverage only to Colorado employers, Pinnacol’s spokeswoman said.
“In a rapidly changing, more competitive market, that’s just not really a recipe for viability for the next 100 years,” she said.
Pinnacol has worked with Zurich American Insurance Co. to provide Zurich workers comp coverage to Colorado employers doing business outside of the state.
While the spokeswoman said Zurich has been a “great partner” for Pinnacol, she said the arrangement has been more “cumbersome” than allowing Pinnacol to directly sell policies for out-of-state operations.
A plan to privatize Pinnacol stalled in 2012 after stakeholder groups — including policyholders, labor representatives, agents and public interest groups — expressed skepticism about the proposal.
Pinnacol has about 56,000 policyholders and generated $524 million in earned premiums in 2014, according to the insurer’s website.
The insurer reported $191.8 million in net income last year.
As conditions in the workers compensation insurance market evolve amid increased competition and improving insurer profitability, residual market insurers such as the one in Colorado are reassessing their place in the market.