Pinnacol Assurance, the state’s workers’ compensation insurer of last resort, laid off 43 workers earlier this month as “a proactive measure,” the agency confirmed Thursday.
The recent layoffs come amid continuing calls to spin off or reform the insurer. On Thursday, supporters of that would convert the quasi-state agency into a fully independent firm announced that they would yank the proposal and instead continue to work through the state legislature for reforms.
The layoffs were announced internally May 14 and happened across the organization. The job cuts accounted for about 7.5% of the company’s 578 employees.
“We are deeply grateful to our talented colleagues for their contributions and are committed to supporting them through this transition,” Pinnacol spokesperson Liz Johnson said in a statement. “This reduction in force is a necessary step to refine our operations over time and ensure we are built for the future.”
Elsewhere in state government, the Governor’s Office of Information Technology this week laid off more than 170 employees as part of what it called a “large-scale realignment.”
The Pinnacol layoffs happened against the backdrop of the yearslong effort to spin off the agency from state affiliation to a fully private insurance company. Supporters of that effort, who have included Gov. Jared Polis, have cited changing working habits that make it harder for the company to compete.
Pinnacol provides workers’ comp insurance to high-risk industries, but as a state affiliate, it can work only with Colorado businesses. As more companies work across state lines, Pinnacol has fewer possible clients. As a result, Pinnacol’s share of the workers’ comp market has dropped from about 60% in 2015 to 49% in 2024.
An internal memo sent to Pinnacol employees acknowledged the declining premium collections but maintained that the company was on solid financial footing. A copy of the memo was provided to The Denver Post.
“Pinnacol’s financial foundation is extremely strong,” the memo states. “The reduction in force is a proactive measure to drive efficiency and reinforce our strong financial position.”
The memo also states: “We don’t have any more plans for layoffs. We’ve made the hard decisions necessary with this action to achieve our short-term business objectives while balancing our long-term efficiency goals.”
Supporters of privatizing Pinnacol have often said the move would put the firm on a better financial footing in a changing market. Ryan Grange, a spokesperson for Pinnacol, said the layoffs were unrelated to ongoing efforts to privatize Pinnacol or the ballot measure being pulled.
Legislative proposals have fallen short
Officials have tried for years to privatize Pinnacol. Polis included the idea in his last two budget proposals.
But as lawmakers have grappled with consecutive billion-dollar budget deficits, even an assumed payout of hundreds of millions dollars couldn’t overcome resistance to the proposal.
Labor interests, in particular, worried that a private Pinnacol would end up raising rates and leaving high-risk industries, such as construction, unable to afford workers’ comp insurance.
After the latest Hail Mary attempt to privatize Pinnacol through legislative means fell short at the tail end of the session earlier this month, a group backing privatization put all its chips on . That measure would have asked voters in November to spin off Pinnacol from state affiliation and to use the proceeds — $150 million — to pay for workforce development.
But that attempt also will go nowhere, according to a joint statement issued Thursday by Pinnacol, the Colorado Building and Construction Trades Council, the local chapter of the International Brotherhood of Electrical Workers and the business nonprofit backing the measure, Colorado Succeeds.
Scott Laband, the CEO of Colorado Succeeds, said in a statement that his group understood Pinnacol was “a cornerstone” of Colorado’s workforce and economy. He pledged to work toward a “smarter, more unified solution.”
Eric Maruyama, a Polis spokesman, said in a statement that it was “important for workers and the state to ensure that Pinnacol is sustainable for the future.” He added that Polis “hopes that we can find a path forward that strengthens Pinnacol for state workers, while not losing sight of the state’s financial interest in the state-created workers’ compensation entity.”
Colorado Succeeds, a nonprofit that self-identifies on as a “non-partisan coalition of business leaders committed to improving the state’s education,” had spent nearly $250,000 on the ballot initiative so far, according to state campaign finance records.
The coalition has “aligned on a framework for collaboratively pursuing Pinnacol’s modernization as a pressing policy matter,” and its members hope to push it through during the next legislative session, according to the joint statement.
“The recent tension around fully privatizing Pinnacol has created an unsustainable risk for workers. Ignoring it is no longer an option,” Jeremy Ross, the political coordinator for the local IBEW, said in a statement. “IBEW is committed to pursuing action to ensure that Pinnacol’s statute keeps up with modern times, while ensuring that men and women who are putting their lives on the line each day to support our community do not lose access to our state’s strongest safety net for injured workers.”
Some saw initiative as ‘pressure tactic’
Stephanie Tucker, the president of the Workers’ Compensation Education Association, likewise said in a separate statement that it intends to keep reforms focused on workers and their families.
Her organization had also raised legal concerns, arguing that the state wouldn’t be able to keep any money from spinning off Pinnacol because it belonged to workers and companies that paid into the insurance pool — setting up potentially years of legal fights.
“This initiative was always a pressure tactic, so it comes as no surprise that itap being dropped now that the legislative session has ended,” Tucker said. “The money at issue was never the state’s to take, and we’re pleased to see that reality acknowledged. Moving forward, we intend to keep our attention on the reforms that truly matter to injured workers and their families.”
House Speaker Julie McCluskie, a Dillon Democrat who supported the final legislative push, said she was pleased the coalition formed, and she hoped work during the session would give a framework to any reforms. She is term-limited in the House, so she won’t be in the legislature to usher any bill through next year.
“Whatap most important is finding a solution that serves workers and meets the needs of Colorado’s economy and evolving workforce,” McCluskie said in a statement.
