Press Room

(CANCELED) Wed., Aug. 25: Division of Insurance to Look Into Pinnacol Rates

Monday, August 23 2010

**NOTE: According to the Division of Insurance, this hearing has been canceled. 

DENVER—    Wednesday, there will be an independent hearing, conducted at the request of the Division of Insurance pertaining to Pinnacol Assurance and concerns over its rate practices.  This is the first time this process has been invoked against any carrier in more than a decade.

Click here for the details from the public Notice of Hearing from the Division of Insurance website which states that Pinnacol Assurance has not demonstrated that its rates are not “excessive, inadequate or unfairly discriminatory”.  This hearing will address those concerns (complete list of the issues addressed in the hearing is below).

The hearing came on the heels of the results of Pinnacol’s performance and financial audits requested by the legislature in 2009 (SB 09- 281).  (Click here for the complete performance audit.  Click here for the complete financial audit.)   Pinnacol Assurance is a quasi- governmental agency which provided workers compensation insurance to more than 50% of the market.  It insures 55,000 businesses in Colorado and nearly 1.5 million workers.

In June, the Audit Committee found that Pinnacol’s rates were excessive, inadequate or unfairly discriminatory as follows:

• Pinnacol used some rating information from 2006 – 2010 that was not filed with the Division of Insurance which violates Colorado law
• Pinnacol does not employ an actuary either in-house or on contract, to assist in setting rates
• Pinnacol Loss Cost Multipliers may unfairly discriminate among employers, overcharge employers with policies in standard and non-standard tiers relative to employers in preferred or superior tiers.
• Used inaccurate information, unsubstantiated assumptions to calculate LCMs
• Lack of adequate controls over rate-setting process
• Pinnacol’s method of determining employer’s eligibility for schedule rating may not be fair to all employers.

Specifically, according to the public hearing notice, the hearing will consider and determine whether:

1. Pinnacol’s Schedule Rating Eligibility Rule requiring a minimum premium of $10,000 complies with Colorado insurance statutes and regulations;
2. Pinnacol’s tier cost multiplier (LCM) complies with Colorado insurance laws and regulations;
3. The factors used in Pinnacol’s schedule rating plan comply with Colorado insurance statutes and regulations/
4. Pinnacol’s use of unfiled rating factors from 2002 and 2009 violated Colorado insurance laws and regulations.

… among other things.  Click the public hearing notice for the complete list of issues the hearing will address.