Pinnacol Issues $47.5 million in General Dividends

Pinnacol Assurance will be issuing its sixth consecutive general dividend. This year, $47.5 million will be distributed to more than 52,000 qualifying businesses — roughly 86 percent of policyholders — throughout the state.


With the 2010 declaration, Pinnacol has now returned nearly $400 million in general dividends to Colorado businesses over the last 6 years. This year’s dividend is based on policyholder performance between June 2008 – June 2009. Dividend checks are calculated based on the size of a policyholder’s annual premium compared with claims costs.

"At a time when Colorado businesses are struggling to recover from the devastating economic downturn, Pinnacol’s ongoing strong financial performance put us in a position to return money to our policyholders," said Ken Ross, Pinnacol president and CEO. ―"We know the impact of this dividend will ease some of the pain businesses are feeling and help create more jobs and stimulate the economy. We applaud our policyholders for their continued commitment to effective claims management and safety practices and are grateful to them for their business and continued support."

For those who are not insurance experts (myself included!) these dividends are a reflection of the realized risk (number and cost of claims actually experienced) during the policy period (in this case June '08 through June '09) being lower than anticipated. Insurance companies collect premium from their customers (policyholders) in advance of the claims based on what they expect those claims to be. If the claims are lower than anticipated then insurance companies can return some of the savings to their customers. As with all insurance, its a partnership between the insurance company and the insured to try to minimize the frequency and severity of the claims experienced, and workers' compensation is no different. Its a win-win: the policyholder (Colorado businesses) gets some of their money back, and the workers who aren't getting injured. Of course there can be years when claims exceed the resources provided by the premium collected, and in this situation it would be unlikely for any insurance company to pay dividends in that event.