State workers’ compensation insurer, Pinnacol Assurance, will have to pay $15 million back to some of its policy holders and an $80,000 civil penalty under a settlement announced today with the Division of Insurance.
The division discovered some irregularities with the way Pinnacol was determining rates for workers’ compensation claims. The company is a quasi-governmental agency that covers 50 percent of the market in the state.
Under the agreement, Pinnacol will stop using two rate filing factors the division claims violated state law.
Pinnacol was the focus of a state-ordered audit this spring. Details uncovered in the audit identified the use of rating factors that were not filed with the insurance division.
“We have come to an agreement that the division of insurance believes will provide relief to Pinnacol policyholders,” said insurance commissioner Marcy Morrison. ”Because Pinnacol is the insurer of last resort in Colorado, employers who are policyholders often accept the rates without question or complaint. It’s important that the Division of Insurance maintain its vigilance to be sure the rates are not excessive, inadequate or unfairly discriminatory.”