Colorado governor Jared Polis has proposed transitioning Pinnacol Assurance, a state-affiliated workers’ compensation insurer and insurer of last resort, into a private entity. The proposal is part of the state’s 2025-2026 budget plan, as detailed in a report from AM Best.
The governor’s budget submission notes that other states have modernized their workers’ compensation systems in recent decades by mutualizing, privatizing, or otherwise restructuring their state-chartered funds.
According to AM Best's report, Polis emphasized the need for Colorado to adapt, citing evolving workplace trends, including remote work and employment across state lines.
“As the workplace has evolved to include more workers who work remotely and across state lines, Pinnacol faces challenges to its business model,” Polis wrote. “For example, under Pinnacol’s current structure, it is prohibited from providing insurance policies that cover workers outside Colorado.”
Polis stated that privatizing Pinnacol would enable the company to expand its operations, access a larger multistate risk pool, and implement other enhancements. These changes, he explained, could allow the insurer to increase profits, achieve economies of scale, and maintain competitive rates while continuing its role as an insurer of last resort.
The governor’s budget also includes plans to allocate $100 million from the proposed privatization toward the state’s public employee retirement plan. This allocation would reduce the burden on Colorado’s general fund for financing retirement obligations.
Pinnacol responded to the proposal in a statement, indicating its willingness to collaborate with the governor’s office, state lawmakers, and other stakeholders to address the proposal’s specifics.
“In doing so, we will prioritize Pinnacol’s capital adequacy, long-term solvency, price stability, and ability to adapt to meet the needs of those we serve,” a Pinnacol spokesperson said in an emailed statement to AM Best.
Pinnacol provides workers’ compensation insurance to more than 50,000 businesses across Colorado, according to the budget request.
In 2018, Pinnacol distributed up to $50 million in workers’ compensation dividend checks to its policyholders. The company’s policyholders have earned dividends 10 times since 2005 through workplace safety and controlling costs.
Should the state proceed with this transition? Readers are encouraged to share their thoughts
