Should Colorado allow Pinnacol Assurance, the quasi-governmental workers’ compensation company, to go private?

The proposal, expected to be on the agenda for the 2026 state legislative session, got its first review on Wednesday from a mostly skeptical Joint Budget Committee.

But the proposal did get a thumbs-up – or at least “it makes sense,” according to Sen. Judy Amabile, D-Boulder.

Pinnacol is a quasi-governmental entity, a domestic mutual insurance company that insures about 50,000 companies and one million workers in Colorado. It is the largest provider of workers’ compensation insurance in the state and serves as the insurer “of last resort.”

Under the proposal that Gov. Jared Polis is floating for the 2026-27 state budget, Pinnacol would pay the state about $400 million from its existing assets, estimated at $1.3 billion last January. Pinnacol would also have to buy out its share of the Public Employees’ Retirement Association, or PERA, pension plan covering Pinnacol employees. 

That’s likely to be a central sticking point, as the deal is being crafted. In November, PERA told Colorado Politics it would set a price of about $302 million. That’s well above what Pinnacol believes it can afford.

Pinnacol has been seeking privatization for years. Going private would allow it to offer its insurance products beyond the state’s borders to Colorado companies with employees in other states. As a quasi-governmental entity, Pinnacol is prohibited by law from selling insurance in different states.

The resulting $400 million in new state revenue from its privatization would be used to fund the homestead property tax exemption for seniors and disabled veterans. That’s about $194 million in 2026 – money that would otherwise need to come from the general fund.

Another $100 million would cover controlled maintenance, and the final $100 million would go into the general fund.

The opinions of JBC members on a possible Pinnacol deal have ranged from skeptical to “open, with questions,” as expressed by Sen. Jeff Bridges, D-Greenwood Village.

Bridges still has issues with the deal, based on comments he made on Wednesday.

He told Mark Ferrandino, the director of the Office of State Planning and Budgeting, that the proposal lacks the stakeholder engagement needed for a deal of this magnitude.

“It seems like we haven’t done the basic political conversations that need to happen with the people that depend on Pinnacol for their coverage,” Bridges said.

These are people who have “a deep stake in ensuring the state has a dependable insurer of last resort,” he added.

Ferrandino said conversations with the business community revealed worries about market share – Pinnacol’s has dropped about 3% in the past year – and the potential impact on insurance premiums. 

One problem, Ferrandino said, is a group opposed to privatization that is not engaging. He didn’t identify the group.

Another issue is timing.

Rep. Rick Taggart, R-Grand Junction, questioned whether there is enough time to complete the required due diligence and whether that can be done in time for the funds to be included in the 2026-27 budget. 

Bridges agreed, stating a lot would need to happen in an extremely short amount of time, “and right now, it feels like those pieces are not in place.” Bridges is hopeful that everyone can come to a big “Kumbaya,” and the $400 million would be available to fill the budget hole. 

But, he said, “I don’t know that I’m optimistic about that.”

Commissioner of Insurance Michael Conway told the committee that this type of privatization has been ongoing for a quarter century.

“If there had been huge red flags, you wouldn’t have seen states continue to go in that direction,” he said.

That includes Utah, Oklahoma, Maryland and Nevada, he said, adding that, this year, Missouri also took that step.

Amabile was the only JBC member who sounded a positive note on the proposal.

While she acknowledged the points raised by the other JBC members, Amabile said she doesn’t think it is a bad idea.

“It makes sense in the world we’re in,” she said, adding that even if the deal can’t be finalized for the 2026-27 budget, “we should still move forward” and potentially use it in the following year, when the state faces another billion-dollar hole to fill.