Gov. John Hickenlooper suffered his first major setback as the state’s chief executive Thursday as his plan to privatize Pinnacol Assurance, the state-chartered workers’ compensation fund, sputtered to a halt.
Hickenlooper, along with Pinnacol officials, said Thursday that the privatization proposal — which would have affected 55,000 employers and sent millions of dollars to education and economic-development efforts — was being shelved for now and needed to be discussed more.
“We agree with Pinnacol that additional time is needed to fully explore the proposal,” Hickenlooper said in a statement. “Clearly, there is more work to do. We look forward to continuing the conversations about restructuring in the coming weeks and months. Our priority remains doing what’s best for injured workers, policyholders and the people of Colorado.”
The governor’s announcement followed a letter that Pinnacol officials sent to Hickenlooper on Thursday saying no legislation should be proposed this year to move the plan forward.
“The board believes that restructuring Pinnacol has many long-term benefits for all stakeholders, and we remain committed to pursuing such a change,” Pinnacol board vice chairman John Plotkin said in a letter from the board. “We think a great deal of progress has been made, but we do not want to rush the process.”
The announcement from Hickenlooper and Pinnacol followed a rough reception for the proposal Tuesday by a task force of business, labor and nonprofit leaders looking at the plan. Most of those at the meeting either opposed the idea or were neutral but with serious concerns.
A number of business groups said their members were satisfied with the status quo and weren’t convinced they would benefit from the quasi-governmental agency going private. Others said it was wrong to call the proposal “privatization” because the state still would have a significant ownership stake and would be able to appoint two board members to the newly formed mutual assurance company’s board.
The original proposal from Pinnacol called for the state to receive an ownership stake worth 40 percent, with a $340 million face value, of what would be the new mutual-assurance company. Hickenlooper revised the proposal so that the state’s share would have been increased to $350 million.
Meanwhile, a $22 million injured-workers fund would have been created, with payments of $1.1 million a year to the fund over 20 years.
Hickenlooper, a Democrat, had pushed hard on the deal, touting the $13.6 million in dividends the state would be paid every year — money that could be used for college scholarships and economic-development projects.
Despite coming to the Pinnacol Stakeholders Task Force meeting himself Tuesday, Hickenlooper could not convince a majority of those present that restructuring the partly public, partly private insurance fund was in their best interests.
The governor and Pinnacol argued privatization would have made it clear that policyholders owned Pinnacol’s assets. Lawmakers in 2009 considered, but then abandoned, taking $500 million from Pinnacol’s surplus to help balance the budget, and supporters of taking Pinnacol private argued that another “raid” could be attempted again some day as long as Pinnacol remained under the state’s control.
Some policyholders and business groups complained about Pinnacol’s tactics in support of the privatization deal, saying the insurer broke an agreement to not lobby for the proposal by running a public ad campaign in favor of it. Then they pointed to a telephone survey that gave policyholders a choice of supporting privatization or seeking more information on the proposal — opposing it wasn’t an option.
Tim Hoover: 303-954-1626 or thoover@denverpost.com
