Pinnacol Asks Governor To Veto Bill 281

Denver, CO (CompNewsNetwork) - Letter To Governor Requesting Veto Of Bill 281-

Dear Governor Ritter:

We are writing to respectfully request that you veto SB09-281.  We believe this bill lacks clarity, is redundant with current state law, creates mechanical challenges that will interfere with proper implementation and creates a committee that is not properly balanced.  Our objections are outlined below:

1. The current bill combines a financial audit and performance audit. The language does not define what is part of the financial audit and what is part of the performance audit. Therefore the bill cannot be mechanically implemented with appropriate scope, standards or direction.

2. Pinnacol already undergoes an annual financial audit pursuant to 8-45-121. The audit is conducted by an independent firm retained by the state auditor. Therefore the audit called for in SB09-281 is redundant and unnecessary. Items specifically mentioned in the bill — known loss reserves and incurred but not reported losses — are included in Pinnacol's yearly audit and reported to the Legislative Audit Committee. In addition, Pinnacol pays for this audit and the requirement that we pay again for work that is already being done is redundant.

3. Also pursuant to 8-45-121, an audit of Pinnacol can be conducted by the commissioner of insurance "at least once every three years." Therefore as noted above, the audit is redundant and unnecessary.

4. The audit as described in SB09-281 is outside the scope and authority of the state auditor. The Department of Insurance (DOI) is responsible for premium rate structure and accepts/rejects filed rates (10-4-Part 4).The DOI utilizes the National Council on Compensation Insurance (NCCI) for rate information and hires outside actuaries as necessary. The Division of Workers' Compensation (DOWC) is responsible for claims performance audit (Rule IV of the DOWC Rules of Procedure).

5. The interim study committee lacks sufficient industry expertise to conduct a fair and balanced evaluation of Pinnacol's operations. Of the 16 committee members, only four will have a comprehensive understanding of workers' compensation insurance.

6. While this is a study of Pinnacol's operations, only one policyholder has a seat at the table. We ensure 58,000 employers representing every county in the state and feel that a large, medium and small employer insured by Pinnacol should be represented on the interim committee.

7. Another group with valuable knowledge of Pinnacol's business practices — independent agents — has no seat on the interim committee. They should be represented.

In addition to the reasons stated above, we would be remiss if we did not express our frustration and disappointment with how the bills relating to Pinnacol were handled. You have stated that you believe "the way we do the people's business is as important as what we do," and expressed your commitment to bringing a new spirit of cooperation and collaboration to Colorado's political landscape. That spirit was missing from the process as many of our elected officials simply made no effort to engage in a productive dialogue or thoughtful compromise regarding either SB09-281 or SB09-273. The lack of discussion and exchange of information between sponsors and interested parties was a very disappointing experience. The bills were introduced without sitting down and discussing Pinnacol and the business we do in Colorado. Instead of crafting collaborative legislation, the bill was passed without the mutual cooperation and exchange that results in thoughtful law. Further, the lack of civility, disparaging rhetoric and absence of fact-finding are all reasons why so many people continue to grow cynical about politics. The legislative process should only be about protecting the best interests of the people of Colorado.

For all of these reasons, we ask that you veto SB09-281. Thank you for your consideration.


Ken Ross
President &CEO 

Gary Johnson
Board Chairman
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