2012 Annual Report
Pinnacol Assurance makes Colorado a safer and a healthier place to work. At businesses large and small, from the Eastern Plains to the Front Range, and across the Western Slope, we work hard every day to help our policyholders create healthy workplaces and keep employees safe on the job.
In fact, Pinnacol spends more than 35,000 hours a year keeping Colorado work sites safe, and last year we provided compassionate care to more than 40,000 Coloradans injured at work.
We bring small businesses, in particular, a level of service and resources typically beyond their reach. Our resources include access to our team of 25 safety consultants, proactive safety programs to prevent injuries and a vast library of safety materials.
In recent years, we’ve taken our commitment to healthy workplaces even further. Through our Health Risk Management pilot program, we help employees and their families live healthier, more active lives. The goal of the program is to prove the link between wellness and fewer employee injuries, reduced workers’ compensation insurance costs and greater productivity for Colorado employers. Through our unique partnership with the Colorado School of Public Health, we support and promote workplace wellness training and education.
Beyond the basic necessities of workers’ compensation insurance coverage, we enhance the quality of life in Colorado by creating healthier, safer places to work.
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President and CEO, Hydro Construction
“Our goal is to bring wellness to Main Street, Colorado. If we can help that small business owner create a healthier, happier and more productive workforce, we’re going to make Colorado a stronger state.”
Director of Health Risk Management
A Message From the Interim CEO
Stable. Dependable. Enduring. Committed to Colorado. These are the hallmarks of Pinnacol Assurance.
As the assured source of workers’ compensation insurance for Colorado, we don’t turn any company away. We remain deeply committed to our mission of protecting Colorado employers and their greatest asset—their employees, as we have for almost 100 years. Pinnacol is the only insurance company solely focused on Colorado workers’ comp, so we know this business, and the state, better than anyone else.
2012: Challenge and Change
Despite our enduring mission, Pinnacol lives in a world where the only real constant is change. In 2012, we saw the national workers’ comp insurance market continue its downward cycle, with increasing claims, rising medical costs and declining investment income to offset losses.
In response to these market conditions, we’re taking proactive steps:
- Applying greater discipline and precision to our underwriting process
- Taking a more focused approach to how we use our financial resources: operationally, promotionally and as corporate citizens
- Dedicating more resources to the management of our investment portfolio, to continue building our financial strength and to offset what we believe will be another challenging year ahead
Over the past year, Pinnacol also experienced change from within. We welcomed new board members, and we redesigned the executive management team. New people are bringing fresh perspectives and innovative ideas to Pinnacol, with the goal of making a good company even better.
Pinnacol will continue to help protect employees—helping to prevent injuries, caring for employees when they do become injured, and getting them back to work as soon as it’s safe to do so. We’ll also continue to protect the health of businesses—helping to minimize workplace hazards and to manage the inevitable risks that come with operating a business.
Health and Safety Innovation
Beyond our everyday commitments, we live on the forefront of wellness and safety innovation with two distinctive programs:
Health Risk Management, our flagship program for making Colorado a healthier place to work, puts work site wellness within reach for small businesses. Now in its third year, this five-year study touches more than 30,000 lives through 300 participating policyholder companies. Year two results include a 15 percent to 25 percent decline in major risk factors such as obesity, cancer and heart disease, with participants’ experiencing improvements in nutrition, fitness and productivity.
What we believe, and hope to prove in the next two years, is the direct correlation between work site wellness programs and the reduction of workers’ comp injuries and claims costs.
Another way we’re making Colorado a healthier place to work is through our multifaceted partnership with the Colorado School of Public Health. Together, we’re delivering continuing education programs to health and safety professionals, training physicians to fight the opioid prescription epidemic and helping small businesses establish work site wellness programs.
I’m optimistic about Pinnacol’s future. We have the right team for the right time in our history. And we’re doing the right things, as we’ve always done, to make Colorado one of the safest and healthiest places to work—for our policyholders, their employees and the state of Colorado.
we remain customer-focused. What sets us apart is our level of customer service and commitment to the business owners of Colorado.”
Vice President of Underwriting
Year in Review
2012 was another challenging year for Colorado’s workers’ compensation insurance companies. Claims increased, medical costs rose and investment income declined.
Regardless of the market, Pinnacol Assurance continues to provide assured protection to our policyholders, with competitive rates and differentiating service. To maintain our financial stability and guarantee the payment of claims that may span years or even decades, we’re taking action on multiple fronts. We are:
- Managing expenses more tightly
- Carefully stewarding the financial resources entrusted to us, with a more focused approach to how we use them for operational, promotional and corporate citizenship purposes
- Applying more discipline to our underwriting practices
- Focusing on the management of our investment portfolio
At the same time, we pledge to continue doing the things that set us apart and make Colorado a safer and a healthy place to work, no matter the season or cycle—such as delivering outstanding customer service; helping policyholders eliminate workplace hazards and keep their employees safe; and delivering prompt, effective care to workers who do become injured.
Earned Premium: $426 million
Assets: $1.902 billion
Surplus: More than $616 million
Returned $37.5 million in general dividends to 89.7 percent of policyholders—our eighth consecutive year of paying dividends
Policyholder Satisfaction and Retention:
Policyholder satisfaction: Averaged 8.8 on a 10-point scale
Policyholder retention: Ninety-two percent of policyholders kept their business with Pinnacol
- Policyholder Retention Rate
- Investment Portfolio Yield
- Number of Active Policies
- Earned Premium
- Top 10 Industries Insured by Premium
- Top 5 Injury Types
- Top 5 Injury Causes
- Top 10 Counties Insured by Premium
General Dividend by County 2005-2012
Chief Investment Officer
As an insurance company, Pinnacol Assurance takes on other businesses’ workplace risks and protects them from potential harm—physically and financially. Protecting others, while protecting our own financial strength and stability, requires a smart investment strategy.
Like all insurance companies, Pinnacol relies on our investment returns. In good years, these returns help us grow the business. In difficult times, we rely on investment income to help offset operating losses.
In today’s market, which is marked by rising rates and tighter underwriting standards, we’ve become even more reliant on our investment portfolio. No matter what obstacles we face, Pinnacol must fulfill our commitments to policyholders and injured workers. Current, past and future claims must be paid.
To continue building our financial strength in today’s tough market, we’re dedicating more attention and resources to the management of our investment portfolio. We recently hired a new chief investment officer who, as part of the executive team, will be responsible for honing our investment strategy and closely monitoring results.
We believe this enhanced focus on investments will bring added security and stability to Pinnacol, its policyholders and their employees across Colorado.
|Earned premium:||$426 million|
|Investment portfolio yield:||4.3 percent|
|Surplus||More than $616 million|
|General dividends:||$37.5 million|
|Policyholder retention rate:||92 percent|
Audited FinancialsView the PDF
Vice President of Underwriting
Pinnacol Assurance’s 600 employees are committed and passionate about what we do—providing assured protection to Colorado employers and their greatest asset—their employees.
Solely focused on workers’ compensation insurance for Colorado businesses, we hold a level of expertise that’s difficult to match. Best of all, we’re based right here in Colorado, with headquarters in Denver and a satellite office in Grand Junction. This allows us to deliver a level of service across the state that’s rare in today’s world of outsourcing and offshoring. When you call Pinnacol, you experience the prompt, friendly and attentive service that’s woven into our culture.
Unlike many of our competitors, that come and go when times are tough, we are a strong, stable and constant presence, ensuring that the promises of workers’ comp are there when you need them most:
- The promise to provide assured protection for every Colorado business that comes to us for a workers' compensation policy, no matter its size or risk
- The promise to pay—promptly and reliably—on claims that may last years, decades or even a lifetime, depending on the severity of an injury or illness
- The promise to shield injured workers and employees from financial ruin when bad things happen
- The promise to maintain our own financial strength, so we can continue to deliver on our mission and commitment to our approximately 55,000 policyholders and the state of Colorado
Without workers’ compensation coverage, businesses and their employees could be financially ruined by workplace injuries or illnesses. For example, an entrepreneur opens a new restaurant, and an employee slips and hits her head. The associated medical costs or lawsuits could shatter the business and, along with it, that entrepreneur’s dreams. The injured worker could face medical bills beyond her means and, perhaps permanently, become unable to support herself and her family.
In 1915, Pinnacol put an end to these scenarios in Colorado. And for the next century, we intend to keep our promises by adding safety, health and peace of mind to the mix that already makes Colorado a wonderful place do business.
Pinnacol Assurance is proud of the many ways we support Colorado causes and touch the lives of people in need—from giving the children of injured workers the opportunity for a college education to volunteering an extraordinary number of hours with local nonprofits.
Always seeking to refine and improve what we do, in the year ahead we’ll strive to be even more focused in how we use our corporate citizenship resources.
Our corporate citizenship efforts are channeled into two main areas:
Pinnacol in Action is our employee-run volunteer program that supports Colorado nonprofits. In 2012, 93 percent of employees spent a total of more than 6,500 hours volunteering in the community:
- Delivered approximately 400 fans for Volunteers of America’s Cool Down Colorado campaign
- Collected 100,000 pounds of food for Volunteers of America’s Food Drive
- Delivered more than 1,778 meals for Volunteers of America’s Meals on Wheels program
- Hosted a 9Health Fair location and served more than 705 participants
The Pinnacol Foundation awards college scholarships to the children of Colorado workers seriously injured or killed on the job—regardless of which insurer handled the parent’s claim.
- In 2012, 150 scholarships were awarded, totaling $500,000.
Since its creation in 2000, the Foundation has distributed over nearly $2.5 million in scholarships, helping hundreds of young people achieve their dreams of a college education.