Pinnacol Assurance 2008 General Dividends

For the fourth year in a row, policyholders who maintain safe workplaces are being rewarded with a general dividend.

In mid-May, eligible Colorado businesses will begin receiving their dividend checks, which total approximately $55 million. This dividend brings Pinnacol's four-year total return of dividends to more than $227 millio

Fast Facts
Frequently Asked Questions
Press Release

Fast Facts

Frequently Asked Questions

What is a dividend?

• A dividend is a portion of a company’s profits paid to stockholders. Because Pinnacol is a not-for-profit company that doesn’t have stockholders, we return a portion of our surplus to our policyholders.

• Policyholders who contribute to our surplus by maintaining a safe workplace share in dividend distributions.

Why don’t you simply lower your rates?

• Rates and dividends are two totally different things that occur under different circumstances.

• Rates are based on future projections; dividends are based on past experience. Our ultimate goal is rate stability year after year, so we set prices based on our best information about the future, but then wait to pay dividends until after we see how things actually play out.

• By the way, Pinnacol has lowered rates every year for the last three years. Our 2008 decrease was 16.5 percent.

Will you pay a general dividend again next year?

• We intend to, but general dividends are never guaranteed since they can be impacted by policyholder claims costs, catastrophic events, the performance of our investment portfolio, and other factors. None of these can be predicted with absolute accuracy.

If Pinnacol doesn’t pay a general dividend next year, is that a result of not managing the business as efficiently as this year?

• Not necessarily. If we’re unable to pay a dividend in future years, it could be due to a number of factors, including higher than anticipated claims costs, changes to Colorado workers’ compensation law, a catastrophic event similar to 9/11, or an economic downturn, which could negatively impact our investment portfolio.

What’s the criteria for receiving a general dividend?

• Policy has an expiration date between June 2, 2006 and June 1, 2007.

• Policyholder must have a qualifying loss ration. Loss ratio is a policyholder's total claims costs compared to the amount of premium paid..

• Premium amount and loss ratio performance must have contributed to Pinnacol’s surplus.

How is the general dividend calculated?

• The general dividend is calculated on a sliding scale of premium size and loss ratio, factors that contribute to surplus. The dividend amount an individual policyholder might receive is based on their individual contribution to our surplus.
  
• Members of associations or group deductible plans are affected by the performance of their groups. If a group's performance didn't contribute to our surplus, individual members will not receive a general dividend regardless of their own individual experience.
  
• Beginning April 30, your agent or Pinnacol underwriter can give you detailed dividend information specific to your policy.

How much money should I expect to receive?

• General dividend amounts vary based on each policyholder’s premium amount and loss ratio.

• The average general dividend being paid this year is about $930. Again, dividends are based on a policyholder’s contribution to Pinnacol’s surplus.

When will I receive my general dividend check?

• General dividend checks will be distributed to qualified policyholders in mid-May. The majority of checks will be mailed, but some will be hand-delivered by agents and/or Pinnacol representatives.

Why is the general dividend less this year than it was in 2007?

• As a result of our 9 percent rate reduction in 2007, total premiums went down, causing the 2008 general dividend amount to be lower.

• Pinnacol made a decision to focus on rate reductions because those reductions have an immediate benefit for Colorado businesses.

• Rate reduction is consistent with our role as the stabilizing force in Colorado's workers' compsensation market.

Is the dividend taxable?

• Generally, dividends are considered taxable, but be sure to check with your tax advisor.

• In January 2009, Pinnacol will issue 1099s to all policyholders who received general dividends of $600 or more, in accordance with IRS guidelines.

Why not credit my premium instead of sending me a check?

• A live check gives a policyholder more control over how to use this money.

• Next year, we may consider giving policyholders the option of using the dividend as a credit against future premiums.

I’ve filed very few claims with Pinnacol. Why didn’t I receive a general dividend?

• Dividend amounts are based on each policyholder’s contribution to surplus through both premiums paid and low claims costs.

• If you do not have a qualifying loss ratio or have a relatively small premium, you may not qualify for a dividend.

• If an association or group deductible program does not have a qualifying loss ratio, then individual members will not receive a general dividend regardless of their own individual experience.

• If a policyholder owes Pinnacol money, it will be backed out of the dividend amount, in most circumstances.

• Policyholders will not receive a dividend if they didn’t submit an audit report .

Are policyholders who participate in one of Pinnacol’s alternative pricing programs eligible to receive a general dividend?

• Yes. Policyholders who participate in Pinnacol alternative programs, such as Large Deductible Programs, Group Large Deductible Programs, Retrospective Rating Plans, Controlled Insurance Programs, Captive Arrangements and Large Risk Alternative Rating Plans are eligible to receive a general dividend.

• Participants in the Association Dividend Program and Individual Loss Control Dividend Program are also eligible to receive a general dividend.

What if an association doesn’t earn a dividend, but some of its individual members have qualifying loss r atios?

• Association members will receive a general dividend only if their association, as a whole, has maintained a qualifying loss ratio and contributed to Pinnacol's surplus.

What if a policyholder changed agents or associations since the dividend period (June 2, 2006 to June 1, 2007) ended? Does that affect their check?

• Policyholders that changed agents/associations since the dividend period ended will still receive a check if they qualify.

• The check stub notation will show the name of the agent/association for the dividend period used to calculate the check.