In the latest news regarding Colorado’s workers’ compensation insurer of last resort, the state Division of Insurance will be holding a hearing on August 25th to examine the company’s latest rate proposals and whether the company violated state insurance laws and regulations.
In a letter announcing the hearing, the Division stated Pinnacol “has not satisfactorily demonstrated that its rates comply with Colorado’s insurance statutes and regulations.”
At issue is a request by Pinnacol to raise its minimum premium from $4000 to $10,000. The Division fears this change could result in a large number of small employers becoming ineligible for a schedule rating.
Pinnacol has been under fire recently for some of its practices. Examiners with the Colorado Office of the State Auditor “reviewed Pinnacol’s rate setting processes for 2006 through 2009 and found weaknesses that raise concerns about whether Pinnacol’s rates may be excessive, inadequate or unfairly discriminatory.”
The examiners go on to say “For 2006 through 2010, Pinnacol used information containing inaccuracies and unsubstantiated assumptions to calculate indicated [loss cost multipliers] and to select final LCMs. The number and significance of the problems indicate a lack of adequate controls over the rate-setting process.”
The auditors also say Pinnacol failed to file rating information they used to determine their rates with the Division of Insurance.
Greg Reents, Pinnacol Director Corporate Compliance, says they have been working with the agency since May to provide it with the information it needs to analyze issue related with its rate filing. In a statement, Reents says “We will respond in detail to all inquires described in the hearing notice during the August 25 proceedings.”
Once the hearing is complete, we will provide you with a summary of the proceedings along with any information that may impact compensation for workplace injuries.