Workers’ compensation insurer fined for overcharging premiums
The Colorado Division of Insurance fined the state’s largest workers’ compensation insurer $80,000 on Tuesday for overcharging premiums to businesses in the state.
The division planned hearings on the matter this week, but it abruptly canceled them, saying it was in negotiations with Pinnacol Assurance over the matter.
Insurance Commissioner Marcy Morrison said in its annual rate filings, Pinnacol failed to note two factors that led to higher premiums. The insurer had been using that practice for the past eight years.
As a result, the quasi-governmental company will credit a minimum of $15 million against the premiums it charges next year to certain customers. Only customers who are schedule-rated, a tool insurers use to adjust premiums up or down, will get the credit.
“We have come to an agreement that the Division of Insurance believes will provide relief to Pinnacol policyholders,” Morrison said. “Because Pinnacol is the workers’ compensation insurer of last resort in Colorado, employers who are Pinnacol policyholders often accept the rates without question or complaint.”
Last spring, a state audit of the insurer discovered the rating factors that were not being disclosed to clients, among other problems with the company.
The audit also found the company was intentionally setting financial goals below prior year’s performance to ensure its executives received millions of dollars in bonuses.