Date: 09/04/2009
Final
Introduction to Structural Options for Pinnacol Assurance
INTERIM COMMITTEE TO STUDY ISSUES RELATED TO PINNACOL ASSURANCE
| Votes: View--> | Action Taken: |
| <none> | <none> |
09:05 AM -- Introduction to Structural Options for Pinnacol Assurance
Bart Miller, Office of Legislative Legal Services, presented three structural options for Pinnacol, referring to a research memorandum describing the options (Attachment A). He began with the option of restoring Pinnacol's status as a state agency, then went on to describe details of the quasi-governmental option (Pinnacol's current status), and concluded with the option of making Pinnacol a completely private enterprise. Mr. Miller further explained an accompanying table that summarizes additional detail on the three options (Attachment B). He referred to 1999 legislation in Nevada and Texas to privatize these state's workers' compensation funds and gave a brief history of the events that led several other states, including Colorado, to consider similar changes. He noted that the Colorado General Assembly considered a similar bill in 2001 that did not pass.
09:14 AM
Upon the completion of the overview, Mr. Miller responded to questions. Senator Harvey asked about the possibility of selling Pinnacol Assurance. Mr. Miller explained that Pinnacol owns Pinnacol but they don't have the authority to sell themselves, and that the legislature would have to give them the authority. Mr. Miller referred to HB 01-1407 and explained the process that would have to occur in order for Pinnacol to be sold. Senator Mitchell continued with questions on the statutory nature of Pinnacol. Mr. Miller explained that, at this time, there is not a clear set of legal rules regarding the sale of Pinnacol. Senator Mitchell acknowledged there is no controlling legal authority, and asked if there is a logical solution. Mr. Miller stated there would have to be a policy solution determined by the legislature. Questions ensued about the characteristics of Pinnacol and private insurance companies. Mr. Miller explained the difference between an insurance company versus a mutual insurance company, noting that "mutual" means the policy holders are part owners who can sit on the board of directors and receive dividends.
09:28 AM
Mr. Ken Ross, President and CEO of Pinnacol Assurance, asked questions about the private or public status of Texas Mutual. Mr. Mark Simon, committee member, continued with a question on the assets that Pinnacol was begun with. Mr. Miller explained that there was probably money transferred into a fund for the company to begin. Mr. Simon continued with other questions regarding the purpose of the creation of a workers' compensation institution. Representative Sal Pace, Vice Chair of the committee, clarified some details on the formation of the company. He also explained a few details regarding Colorado Compensation Insurance Authority (CCIA) being turned into Pinnacol. He noted that CCIA was a state fund, and when funds were diverted, how the company became Pinnacol, a quasi-governmental organization. Representative Cheri Gerou reminded the committee that not only were funds diverted to Pinnacol, there was an issue with the liabilities that Pinnacol took responsibility for. Senator Carroll followed with a question regarding terminology in statute that suggests what the legislature should do in the case of selling Pinnacol. Mr. Ross stated statute suggests there is a statement regarding dissolving Pinnacol, but not selling Pinnacol.