Comp insurer looks to sell policies outside state lines

Colorado's state-chartered workers compensation insurer, Pinnacol Assurance, has released proposed language for legislation that would allow the company to sell comp policies outside the state.

Denver-based Pinnacol said in December that it planned 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. 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.”

Pinnacol has posted a copy on its website of proposed bill language related to the out-of-state expansion, as well as an FAQ document and other informational materials.The bill had not been submitted to the Colorado General Assembly as of Wednesday, according to the legislature's website.

While Pinnacol tried and failed to privatize in 2012, the insurer reiterated on its website that it is not seeking to privatize under the new proposed bill language.

Pinnacol said in a statement online that it wants to create the subsidiary because it “operates on an increasingly un-level playing field” since it can only sell workers comp policies in Colorado while other workers comp insurers compete in Colorado and other states.

“For years, Pinnacol policyholders have asked us to provide workers' compensation coverage to their out-of-state employees, but we can only do so through a reinsurance arrangement where all we do is pay claims; it does not enable us to provide the same level of service our policyholders value and which gives them a competitive advantage,” the statement reads.

Pinnacol has worked with Zurich American Insurance Co. to provide Zurich workers comp coverage to Colorado employers doing business outside of the state.

Pinnacol said that its investment in the for-profit subsidiary would be limited to no more than 3% of Pinnacol's admitted assets, or about $75 million in terms of Pinnacol's current holdings.