Saving On Premiums

The best way to lower workers' comp costs is to prevent workplace accidents from happening in the first place. As a Pinnacol policyholder, you can also save money by understanding:

How is my premium calculated?

Payroll

Payroll is one of the primary factors used to determine workers' compensation premiums, although it isnot the only one. Classification codes and experience modifiers, both assigned by the National Council on Compensation Insurance (NCCI), are two of the other factors that usually figure most prominently in the calculations of your premiums.

Classification Codes

In part, your premium is determined by a "classification code" assigned to your industry (e.g., painting, retail, etc.) by the NCCI. This code is based on the history of injuries associated with your industry.

When an industry — say, construction — experiences more worker injuries, the classification code can change and raise rates on all companies within that industry. That’s why we're committed to helping all policyholders keep their employees safe, as well as providing industry-specific safety programs to industries with historically higher injury rates.

Experience Modifier

An experience modifier (or "e-mod") is a numerical rating assigned to your policy, also by NCCI, based on your company’s accident history. This number is used as a multiplier against the average premium rate of companies in your industry — in other words, a roofing business is compared only to other roofing businesses.

If your e-mod is lower than the industry average (1.00), your premium will be, too; if higher than average, your premium will reflect this as well. Pinnacol can help you keep your e-mod (and premium) low through our many safety services and return-to-work programs.

What discounts are available?

Pinnacol offers a range of discounts for loyal policyholders and for those who take steps to reduce injuries and contain costs:

Premium discount — This discount applies to standard premium of $10,000 and greater; the larger your premium, the greater your percentage of premium discount.

Retention discount — This discount rewards policyholders who have remained continuously insured with Pinnacol Assurance for three or more full policy years and have a manual premium at standard rates below $10,000. This discount does not apply to non-standard tier policies.

Group association discount — Members of qualifying industry, professional, and trade associations that meet three-year loss ratio standards (i.e., favorable claims costs compared to amount of premium paid) may receive a 4 percent premium discount. Learn more about the benefits of joining a group association.

Schedule rating discount — This discount applies to manual premium of $10,000 and greater. It assesses policyholders' current risk characteristics together with their historical performance.

Cost containment discount — This discount rewards policyholders who implement and maintain a standardized safety program and achieve certification through the State of Colorado Workers’ Compensation Cost Containment Certification (CCC) Program. Pinnacol’s safety consultants and our Loss Prevention CD-ROM, available online to policyholders, can help you become certified.

Designated provider discount — Policyholders receive a 2.5 percent discount for having designated medical providers.

Deductible discount — This discount allows policyholders to pay a portion of claims costs on a per-claim basis in exchange for a premium discount.

Why join a group program?

About 25 percent of Pinnacol’s customers belong to an association or group program. Groups are typically organized by a specific industry; a professional or trade association; a chamber of commerce, or other type of organization.

Groups and associations offer members a range of support and services aimed at making workplaces safer and reducing workers' comp costs. These include:

• Group Association Discount — Members of qualifying associations that meet three-year loss ratio standards (i.e., favorable claims costs compared to amount of premium paid) may receive a 4 percent premium discount.
• Group Dividends — Pinnacol’s group association dividend plan is designed to promote association safety efforts and to pay dividends to association members based on their individual and collective success.
• Safety Programs — The group’s safety committee provides safety-plan parameters that all members follow, increasing the likelihood of a successful year for companies that are committed to safety.

To learn more about group associations — including how to become a member — contact Pinnacol’s marketing department at 303.361.4788 or talk to your insurance agent.

How Can I Earn Dividends?

General Dividends

Over the past five years, Pinnacol has returned $347 million in general dividends to policyholders statewide. The general dividend is a portion of Pinnacol’s surplus paid to policyholders who earn it by maintaining safe workplaces and keeping their losses low.

In 2009, we issued dividend checks to 89 percent of policyholders that met the following criteria:

• Their policies were written during the "general dividend calculation period," which is approximately two years before the distribution date; in other words, the May 2009 distribution was for policies expiring between June 2, 2007 and June 1, 2008.
• Their premium amount and loss ratio performance contributed to Pinnacol’s surplus. (Loss ratio is a policyholder's total claims costs compared to the amount of premium paid.)

You can keep your policy’s loss ratio low through safety efforts, having a return-to-work program in place, and managing claims effectively.

Although general dividends cannot be guaranteed, Pinnacol will continue to maintain efficient and entrepreneurial business practices so we remain financially strong and are in the best possible position to pay a general dividend each year.

Other Dividend Programs

Pinnacol offers several other dividend and premium-savings programs to policyholders who are willing to assume a greater portion of financial risk for their claims. These include our:

• Individual Loss Control Dividend Plan
• Alternative Risk-Sharing Plans
• Group Programs 

For more information about these programs, please call your insurance agent or Pinnacol at 303.361.4000 or 1.800.873.7242.