Colorado lawmakers are weighing a proposal that would allow Pinnacol Assurance to sever its remaining ties to the state in exchange for a $300 million payment, a long‑debated shift that supporters say could stabilize the insurer’s future and help plug a looming budget shortfall.

A draft of the bill obtained by Colorado Politics spells out just how Pinnacol would “disaffiliate” from the state.

Notably, the bill’s authors include members of the Joint Budget Committee, which, as a panel, had been skeptical of the concept. Rep. Rick Taggart, R-Grand Junction, and Sen. Judy Amabile, D-Boulder, are listed as cosponsors.

The push to let Pinnacol fully separate from the state has circulated at the Capitol for decades, beginning in 2002 when lawmakers directed the insurer to operate as an independent, member‑owned mutual company.

Pinnacol, the state’s workers’ compensation insurance of last resort, has remained a quasi-state entity, which keeps the insurer from offering workers’ compensation insurance to Colorado companies with workers in other states.

While the insurer is still the largest workers’ compensation insurance provider in the state, with about a 50% market share, that share has dropped substantially in recent years, and the change would be key to the insurer’s long-term success, according to supporters of the company breaking away from the state.

“We’re trying to ground folks” on the dollars, said Wes Parham, vice president for public affairs at Pinnacol, in an interview with Colorado Politics last week.

The state shed its liability for Pinnacol in 2002, when the company became a mutual insurance company. Since then, the law has been clear — the state assumes no risk or liability for Pinnacol’s financial condition, and the company is solely funded by employers’ premiums.

The proposal from House Speaker Julie McCluskie would require Pinnacol to pay at least $300 million to the state. The money would be divided among various programs.

Pinnacol would also pay the state pension plan an amount equal to a 6.25% discount rate. The state pension plan had previously asked for $302 million.

Unions and employee groups have raised a central worry — whether Pinnacol would continue serving as the insurer of last resort, the role that requires it to cover any business, no matter how risky.

Under McCluskie’s proposal, Pinnacol would be required to continue serving that market for three years. After three years, the state Division of Insurance would contract with a workers’ compensation insurer to serve that market and the insurer would get a break on its premium taxes, the proposal said.

The renewed push for disaffiliation comes as lawmakers work to balance the 2026–27 budget, relying on what they described as painful cuts and more than $1 billion in cash transfers to close a general fund shortfall.

McCluskie’s bill is not the only proposal attempting to allow Pinnacol to disaffiliate. A ballot measure from Colorado Succeeds would take a different approach, putting $150 million into a workforce training fund. The state would get nothing.

The state title board approved the measure on March 18.

The Pinnacol legislation is not expected to be introduced until after the House completes its work on the 2026-27 state budget.