The Special Committee of the Pinnacol Assurance Board of Directors has completed a full, rigorous examination of Pinnacol’s business practices and policies. This examination was done at the request of Governor John Hickenlooper and he has received a copy of the report on the examination prepared by the Special Committee. The board today is releasing the report to the public.
Board member John Plotkin chaired the Special Committee and was joined by board members Robert J. Jolly, Nonie Willisch and John Cevette. Additionally, the Special Committee retained the services of outside legal counsel and a forensic auditor to assist in the examination. The examination found nothing the Special Committee believed fell beyond the reasonable practices of a company charged with competing in the mutual insurance marketplace, but there are specific, limited areas that Pinnacol management has been directed to address. Where appropriate, changes have been made or will be implemented soon that will establish clear operational guidelines and ensure transparency.
Those changes are detailed in the Special Committee Report, but briefly stated the Special Committee is making the following recommendations:
- That management exercise heightened scrutiny to assure that expenditures are reasonable and do not create an appearance of impropriety or lavish spending.
- That management review and recommend further changes to the policies and procedures for management travel and entertainment expenditures adopted in December 2010. Such revised policies should provide ample detail and guidance to management to assure that future expenditures satisfy heightened scrutiny and transparency standards.
- That Pinnacol limit attendance on agent incentive trips to senior management and senior marketing representatives. The Special Committee further recommends that Board members not attend Pinnacol Club agent incentive trips.
- That management review past lobbyist expenses with respect to compliance with Colorado law and that review should be considered in future decisions regarding hiring and retention of lobbyists.
- That management and existing Board sub-committees continue to review the long-term contractual relationships between Pinnacol and third-party consultants offering actuarial and financial advising services on a regular basis to ensure continued adherence to Pinnacol’s business objectives.
- That the Pinnacol Board of Directors continue to exercise critical oversight of the process for determining incentive pay, including establishing performance goals, associated metrics and setting the appropriate weight for each metric.
With the work of the Special Committee finished, the Pinnacol board and management will focus their full attention on continuing to deliver exemplary financial results while serving the company’s 55,000 policyholders and protecting the lives of nearly one million Colorado workers. Pinnacol is committed to providing a stable and predictable workers’ compensation market for Colorado businesses; to providing benefits to injured workers and their families; and to serving as the carrier of last resort providing a safety net for Colorado businesses that cannot obtain insurance from private carriers.
Source: Pinnacol Board of Directors