Pinnacol Assurance will reduce its premiums for workers’ compensation insurance by 3.2 percent for 2017, according to information from the company. At the same time, the company will give some money back to companies in the coming months.
The move stems both from fewer workers’ compensation claims and the state’s strong economy, says Ryan Grange, senior communications specialist for Pinnacol.
“One of the factors is that we have seen claims go down,” he said. “When we took a look to see what we might need to cover our costs in the upcoming year, we decided to lower the rates. Rates are based on future projections, and dividends are based on past experience. Our ultimate goal is rate stability year after year, so we set rates based on our best information about the future. But we wait to pay dividends until results from the previous period are available.”
We’re cutting rates in 2017 for a variety of reasons, including fewer claims and a strong local economy. The 2017 general dividend is primarily a result of strong operating results that have produced adequate surplus to give some money back to our policyholders.
The Colorado Division of Insurance suggested a 2.4 percent rate decrease, the company said, but Pinnacol’s board of directors decided on a steeper deduction.
At the same time, about 90 percent of companies who use Pinnacol Assurance as a workers’ compensation insurance company will receive a check in the mail, Grange said. The dividend is given to companies “who earn it through their commitment to workplace safety and controlling claims costs,” he said.
If the company does not have a “significant and unexpected financial loss” before the end of the year, they will send checks totaling $50 million to its policyholders. Last year, Pinnacol returned $30 million. The board will set the exact among in February, and distribute the money in April. Since 2005, the company returned $506 million to companies with Pinnacol insurance policies.
Pinnacol is not a typical workers’ compensation insurance company. Created by Colorado statute in 1915, the company remains quasi-governmental, with certain rules and roles it must follow, Grange said.
“Our board is appointed by the governor,” he said. “We can only work in Colorado and we must insure any company — regardless of risk. We were created to be the assured workers’ compensation company in the state.”