Financial stewardship

More than 56,000 Colorado employers have chosen Pinnacol Assurance as their workers' compensation provider, trusting us to keep rates reasonably low and manage their premium dollars wisely.

That's why we focus on maintaining financial stability, which guarantees the payment of benefits to injured workers and their dependents that may span years or even decades. To do so, we manage our expenses, carefully steward our financial resources and apply disciplined underwriting practices.

Our operating expenses as a percentage of our earned premium are around 15 percent better than the property and casualty industry average, and as much as 18 percent lower than other state workers' compensation funds, according to published industry data.

Rates and dividends

When Pinnacol is financially sound, our policyholders benefit. In fact, our recent financial performance allowed us to give back to Colorado employers in two ways in 2019:

  • A rate decrease
  • A general dividend of $70 million distributed to policyholders

Over the last fourteen years, Pinnacol has returned more than $500 million in general dividends to policyholders.

Audit controls

Pinnacol has both internal and external audits in place to ensure our spending practices meet the highest standards of efficiency, risk management and statutory compliance:

  • The Colorado Office of the State Auditor contracted KPMG in 2014 and, as in recent years, they did not find any financial adjustments or deficiencies in our internal controls.
  • Internal audits, conducted 2 – 3 times per quarter by EY, ensure that Pinnacol's processes in financial reporting and compliance with laws and regulations are working.
  • We have controls to assure that employee expenses comply with our travel and expense policy.
  • KPMG tests those controls each year (authorization over 3rd party invoices and employee expense reports). They have not identified a deficiency in this control.

Agent incentives

Nearly 90 percent of Pinnacol's revenue comes through agents. They are Pinnacol's sales force, and we, like all insurers, recognize the important role they play in our success through various incentives. Agents qualify for incentives such as annual trips based on the amount of premium they write for Pinnacol, the same basis other insurers use.

Since 2010, all of Pinnacol's agent incentive trips have been within Colorado, supporting local economies and policyholders. According to a 2015 survey by the Financial & Insurance Conference Planners association, 85 percent of incentive trips offered by US insurers are to international locations. These incentive trips represent less than one half of one percent of Pinnacol's operating expenses.

Pinnacol's travel expenses are half the average in the property and casualty (P&C) industry: Pinnacol spends 0.3 percent of earned premium on all travel expenses compared to a 0.6 percent average among the industry. We also compare well to other state workers' compensation funds, which spend between 0.2 and 0.5 percent on travel expenses.

Economic impact

Pinnacol touches more Coloradans than just agents and policyholders. An economic impact study conducted by the Leeds School of Business at the University of Colorado concluded that Pinnacol created approximately $439 million in economic activity in 2014. This was the result of the direct employment of nearly 600 employees and the purchase of goods and services from companies across the state. Without Pinnacol, those dollars would flow to large out-of-state carriers.

Community investments

While good stewardship of our policyholders' premiums is paramount to Pinnacol, we also feel a responsibility to give back to the community in which we work and live. As a workers' comp insurer, we focus our community investments in three key areas:

  • Rehabilitative health services
  • Employee safety and health
  • Economic vitality and workforce development

We know how a serious workplace injury or death can devastate a family, which is why we created the Pinnacol Foundation in 2000. The foundation awards scholarships to the children of Colorado workers injured or killed on the job — regardless of the insurance carrier. Since its creation, the foundation has awarded nearly $5.5 million in scholarships to more 550 students.

Stability for the future

The business practices, controls and investments detailed above result in a stable and dependable Pinnacol that Colorado employers can count on. That has been our mission since our first day of operation in 1915, and it will continue for the next 100.