DENVER—Two appointees to the Pinnacol Assurance board survived a polite grilling at the state Capitol on Thursday, with lawmakers asking them about the state-created insurer’s large surplus and sky box at Invesco Field.
The Senate Health & Human Services Board unanimously backed the appointments of R.J. Jolly of Kit Carson and Paul Pettinger of Fort Collins, sending their nominations to the full Senate for confirmation.
“You probably picked the worst time to come for confirmation and reconfirmation,” Sen. Lois Tochtrop, D-Thornton, told them.
Both were nominated by Gov. Bill Ritter in January before lawmakers began eyeing the company’s $684 million surplus to help balance the state’s budget. Lawmakers have abandoned going after that money this year but are still pursuing a bill that would give the state greater control of the company, as well as studying the company’s management and whether to sell it off.
Jolly is a farmer and rancher who was first appointed to the board in 2003 and is up for reappointment. Pettinger is a new appointee who works for New Belgium Brewing Co. They are Ritter’s first appointees to the nine-member board that oversees Pinnacol, the state’s dominant workers compensation insurer.
The company has its roots in a state fund started in 1915 to take care of injured workers, but state lawmakers agreed to spin it off in 2002. It is defined in law as a political subdivision of the state, but the company, not the state, has ownership of its funds. It pays no state or federal taxes but must provide workers’ compensation insurance to any company that needs it.
Jolly said executives have been paid bonuses for their work in pulling Pinnacol out of a deficit much quicker than expected. CEO Ken Ross earned $448,813 last year, including $131,545 in bonus payments.
Jolly acknowledged that the sky box was a “sore subject” that at first troubled him. But he said taking insurance brokers there helps reward good work, which ultimately helps Pinnacol. He also said the perks are minor compared with what’s offered by private businesses.
But Sen. Morgan Carroll, D-Aurora, said she thought paying commissions for good work would be more appropriate than “elaborate entertaining.”
Pettinger said his company must work with outside distributors and understands the need to reward good performers. But he acknowledged “business as usual” has changed in recent months.
“The world is changing. We do need to look at that, but we still have to find ways to incentivize people to perform,” he said.
Pinnacol says it needs a larger surplus—the company’s surplus currently is about six times the minimum amount required by regulators—because it can’t rely on the state or a parent company to back it up. Private insurers typically hold a surplus of up to three times the minimum amount and return the rest to the parent company, which can use the money to subsidize other branches of its business.
