Date: 08/14/2009
Final
Jeff Tetrick - Pinnacol CFO
INTERIM COMMITTEE TO STUDY ISSUES RELATED TO PINNACOL ASSURANCE
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02:35 PM -- Jeff Tetrick, Pinnacol CFO
Mr. Tetrick discussed the 2008 annual filing for Pinnacol to the Division of Insurance and the components that go into Pinnacol's budget. They are currently building the 2010 budget.
02:52 PM
Senator Tochtrop asked whether Pinnacol was accurately described as a service company, since most of it's costs are for employee salaries. Mr. Tetrick responded that employee salaries and benefits constitute a large expense, but that commissions paid to agents was even larger. Sen. Tochtrop asked whether there was any effort to scale back compensation for executives, given the current economic climate and the fact that Pinnacol is a political subdivision of the state. Senator Mitchell asked Mr. Tetrick to review the highlights of his presentation. Mr. Tetrick responded that he focused every day on benefits to employees, benefits to injured workers, solid value for policyholders, and the Pinnacol Foundation.
03:02 PM
Rep. Pace noted the average income level of residents in his district and contrasted that with the fringe benefits Pinnacol offers. Mr. Tetrick responded that they try to provide a balance that incorporates lower expenses than other insurers and, hopefully, higher service to policyholders and injured workers insured by Pinnacol. Rep. Ryden asked whether Pinnacol was a policyholder of Pinnacol (they are), and who the board members held a fiduciary responsibility to represent. Mr. Tetrick and Mr. Ross noted the statute outlining the board members and the criteria for appointing members.
03:11 PM
Dr. Parry asked about total premiums paid and benefits/costs paid for settled and approved claims. Mr. Meersman described his experience as a board member and as a member of the compensation committee. He noted that Pinnacol often hired outside consultants to review compensation packages, and that the goal was to pay salaries to executives that were competitive for the industry.
03:23 PM
Mr. Simon asked about the rationale for a state political subdivision designated as the insurer of last resort to compete with the private sector. He also asked whether the fringe benefits made available to employees were reported as compensation for those employees. Commissioner Morrison talked about her past experience on a board and noted the importance of board members in governing the organization, aside from the role of paid executives.
03:38 PM
Rep. Pace asked what Pinnacol could fetch from a private buyer. Sen. Carroll asked about the $2 million in travel expenses, highlighting the fact that Pinnacol only writes policies in Colorado. Mr. Tetrick responded that the travel figure includes $500,000 for mileage reimbursement for about 600 employees.
03:44 PM
Sen. Harvey asked whether the state had any ownership interest in Pinnacol for purposes of a sale. The committee discussed what interest the state has in Pinnacol and whether it could be sold. Senator Carroll reminded the committee of the agenda for September 4, which includes a discussion of future options for Pinnacol. Mr. Simon asked about the $15.8 million in taxes and fees.