Annual Report

& Audited Financials

A Message from our CEO

As we release this 2019 annual report in mid-2020, it’s undeniably strange to look back at Pinnacol’s most successful year ever while our economy is now in its worst trough since the Great Depression. Like every business, Pinnacol will experience a significant impact from the COVID-19 pandemic. Yet we are better prepared than many others to weather it. 

There are many reasons for that statement. First and foremost, our policyholders — and the policymakers who review our finances — should be reassured by the strong foundation of our surplus. Not only has it enabled a very strong combined ratio (see the chart below), but also, and most important, it is our surplus that best enables us to weather storms like the one we’re all experiencing now.

Pinnacol’s surplus is the equity designated to cover unexpected claims/losses and economic fluctuations (separate from the reserves we carry to cover the risks we know about). It serves as our own guaranty fund. Because we are required to accept all comers and write risky policies that commercial insurers can decline, we are not allowed to participate in the guaranty fund mechanism that other insurers can tap if they run into trouble. Our risk is also increased by the fact that we are restricted by law to only one line of business in one state, meaning we can’t diversify our operating risk in the same way other insurers can. In addition, we have a significant pension liability that commercial workers’ comp carriers don’t. Over the past three years, our surplus balance took a nearly 20% hit from additional Public Employees Retirement Association liabilities. And as we estimate the impact of COVID-19 on our business, another 15%-20% impact is not out of the question.  

Accordingly, the capital adequacy Pinnacol’s surplus represents is essential for giving our policyholders and their employees peace of mind about their workers’ comp coverage at this time of unprecedented uncertainty.  

Pinnacol’s stakeholders can count on other strengths too. Our migration to digital-first interactions has meant that we haven’t missed a beat with policyholders, injured workers and agents as the world abruptly shifted to virtual communications. Our customer-centric approach to developing our online tools and our relentless focus on customer satisfaction have resulted in industry-leading policyholder net promoter scores and injured worker satisfaction scores (see graphics below).  

None of these improvements would be possible without our people. I would put Pinnacol’s employees up against anyone’s. Their empathy, dedication, curiosity, creativity and work ethic are the real engines that drive our results. They have worked tirelessly to create efficiency by developing better systems, retooling our training and improving our processes to enable our best-in-class customer service. 

When our operating and investment returns are strong, as they were in 2019, we are able to return the resulting additional surplus to our policyholders in the form of dividends. We have paid $270 million to Colorado businesses through dividends in the past five years, including a $70 million dividend for 2019 that we paid out in March of this year, just as our policyholders were being devastated by the COVID-19 crisis. In addition, if our operating returns are stronger than expected, we are able to decrease our premium rates going forward. Over the past five years, we have decreased average premium rates by a total of 29%, including an average 7% decrease in 2020 rates. Unfortunately, in light of the impact COVID-19 is having on Colorado businesses, we don’t anticipate being able to release a dividend in 2021. 

Even so, because of the strong foundation we have forged, our customers can be assured that we will be here for the long haul, still able to provide the caring protection they’ve come to depend on. 

Phil Kalin
President and CEO
Pinnacol Assurance

Let's look at the numbers

We issued general dividends to Colorado companies

In 2020, Pinnacol distributed $70 million in dividends to more than 50,000 employers throughout the state. We’ve issued a dividend 11 times since 2005, returning more than $746 million in total dividends to Colorado businesses when they need it most. Learn more about general dividends.

Dividends last 5 years
Source: The combined ratios presented are net of any policyholder dividends.  Pinnacol's combined ratio before dividends was 88.8%.

We've reduced our rates over time

In 2019, we reduced our rates by 10%, building on several consecutive years of cost savings for our customers. This keeps more cash in their pockets and keeps their workers’ compensation premiums more stable over time. Learn more about our financial stewardship.

Price comparison since 2015
Source: S&P Global Market Intelligence.

We've outperformed our peers and competitors

Our combined ratio shows our underwriting profitability compared with that of our peers and competitors, which has led to five years of rate decreases and dividends. A combined ratio below 100% indicates an underwriting profit. Learn more about our superior claims handling.

Score over year
Combined ratio comparison

Our grantmaking supports Colorado communities, workers and businesses

In 2019, Pinnacol gave

$534,723 in grants

to employee health and safety, rehabilitative health, and economic vitality and workforce development.

Learn more about how Pinnacol supports our community.

The Pinnacol Foundation helps children of injured workers pursue their dreams

Pinnacol awarded

$474,890 in scholarships

to 100 students across Colorado for the 2019-2020 academic year

Learn more about our Pinnacol scholars.
As part of our annual giving campaign


of employees donated


to nonprofits. Pinnacol matched contributions for a total gift of


In 2019 our Injured Worker satisfaction score was

4.04 out of 5

exceeding our competitors’ 2018 average score of


showcasing our commitment to caring for workers when they need us most.

Our customers are happier than ever

Our policyholder NPS score of 53 shows our often long-term partnerships with our customers and measures how likely they’d be to recommend Pinnacol to others. Our policyholder NPS far exceeds the industry average of 31.
COVID-19 policy update

2020 Annual Report

Audited Financials

A Message from our CEO

At Pinnacol, we “put care to work.” And 2020, even as it posed unprecedented challenges, gave us ample opportunities to live that mission. I could not be prouder of how our people met those challenges.

In my 2020 version of this letter, I noted that the company would undoubtedly be significantly affected by COVID. And indeed, we were – in both negative and positive ways.

For the first time in many years, our combined ratio exceeded 100, indicating a slight underwriting loss, though our net income remained strong. This was driven in part by lower premium revenue after we reduced rates for the fifth straight year in 2020 and also saw payrolls among our policyholders significantly lower than originally estimated because of pandemic-induced layoffs. Yet because of our disciplined approach and solid surplus, we were able to reduce rates again this year and issue our sixth straight general dividend.

Like most workers’ comp carriers, we saw a lower claims volume in 2020, as many employers laid off workers and others were able to enable employees to work from home, lessening their risk exposure. At the same time, though, we saw a significant volume of COVID claims, with the majority coming from long-term care facilities, followed by health care workers and first responders.

As we watched the impact of COVID on Colorado workers and businesses, we knew we had to meet their needs and those of our community at large in new and different ways. In the early days of the pandemic, we created a fund to cover wage replacement costs for first responders and health care workers unable to work while they awaited COVID test results. We forgave premiums for policyholders whose revenues evaporated. We gave more than $2 million to local and statewide relief efforts targeting small businesses.

I am perhaps proudest of the way our remarkable team members met the challenge of serving our customers while working fully remotely. Our policyholder Net Promoter Score (a measure of satisfaction) grew steadily over the past year from an already strong base to 61 so far in 2021 – compared with an industry benchmark in the mid-30s. The injured workers we serve rate us at 4.16 on a 5-point scale, and the workers whose COVID claims we handled rate us even higher, at an average of 4.3. No other carrier comes close to this level of injured worker satisfaction.

We’ve seen new challenges in 2021. Colorado’s workers’ comp market is more competitive than ever before. Companies with multistate operations and multiple lines are aggressively pursuing Pinnacol’s business, often offering rates we can’t match because they can offset workers’ comp losses here with gains in those other states and lines. Despite some of the best financial and customer satisfaction results in the industry, we have seen a small but steady decline in our market share over the past several years. Pinnacol remains trapped by an outmoded statute that limits our ability to evolve to meet the changing needs of Colorado businesses. While we continue to work toward an eventual loosening of those statutory shackles, we will continue to innovate within our constraints, with digital and business transformations that enable us to provide the superior customer service Colorado companies and employees expect and deserve.

Phil Kalin
President and CEO
Pinnacol Assurance

Let's look at the numbers

We issued general dividends to Colorado businesses when they needed it most

In 2021, Pinnacol distributed $50 million in general dividends to almost 53,000 policyholders throughout Colorado, and at the height of the pandemic in 2020, we issued $70 million. We’ve distributed $320 million in dividends since 2016, which equals approximately 10% of premium revenue. Learn more about general dividends.


Rate decreases over time

We’ve reduced our rates steadily over the past decade

In both 2020 and 2021, we lowered our rates by an average of 7%, building on five consecutive years of cost savings for our customers. This means they have more money to invest in their companies and employees and to contribute to a stable workers’ comp environment for businesses. Learn more about financial stewardship.

We've outperformed our peers and competitors over time

While our 2020 combined ratio reflected a slight underwriting loss in 2020, our combined ratio has significantly outperformed our peers and competitors over the last five years.  This has allowed us to reduce rates for and pay dividends for the last five years.

Five year combined ratio average, 2016-2020
(lower is better)

CUSTOMER satisfaction SCORES

Our customers are more satisfied than ever

In 2020, we had our customers’ backs when they needed us. We were the first in Colorado to defer premium payments when businesses were reeling from the uncertainty of the pandemic. We proactively worked to ensure customers had the correct payroll levels so they didn't pay any more than necessary, and we didn’t charge them when staff were still on their payroll but not doing their regular work. We also donated over $2.2 million to funds to help communities, businesses and workers get back on their feet.  

As a result, we posted a sky-high policyholder Net Promoter Score (NPS), a measure of whether policyholders would recommend us to others. Pinnacol’s latest NPS is 61. For comparison, the industry average NPS for insurance is 10.

COVID-19 policy update