Different View of Colorado’s Pinnacol
I decided to publish a different view of Pinnacol. One of my blog readers that is an agent in Colorado disagreed with what I had said about Pinnacol in one of my recent posts. The verbatim quote is in the next few paragraphs. I may or may not necessarily agree with everything, but it was well thought out and written.
Pinnacol has no plans of expanding outside the state of Colorado, which allows them to keep a federal tax exemption. They will also stay as the insurer of last resort. This portion of the business would be exempt from state premium tax. The premium tax on the remaining business is insignificant, 1%. That would translate to less than $4 million for the state based on Pinnacol’s current book.
Pinnacol already has more than 50% of the Colorado WC market (that number fluctuates depending on the metric). This includes many of the best accounts in the state along with the business they have to write. They do have the ability to place other states coverage through a cut-through deal, currently with Argonaut (soon to be with Zurich).
I was confused by your statement that, “Cherry picking the good accounts that are just in Colorado would not enable Pinnacol to stay in business very long.” Pinnacol has been very successful in not only writing the very best the state has to offer, but also the risks that nobody else will touch.
Even though the discussion on Pinnacol may not directly apply to your state, I have posted on it many times as along with West Virginia, Nevada, Oklahoma, and other states the Workers Comp market is quickly changing overall. These and other states along with the health care debate should be looked at as bellwethers for your Workers Compensation situation.
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