L&I proposes lowest workers' comp rate increase in five years

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Governor's workers' comp reforms bring rates down, avoid double-digit increase

The Department of Labor & Industries (L&I) has proposed a 2.5 percent average increase to workers' compensation premium rates – the lowest increase in five years.

To help save jobs in the state's struggling economy, L&I is proposing a 2.5 percent average increase. While many were expecting a higher increase, reforms passed in the most recent legislative session prevented a double-digit rate increase.

Proposed rate is an average

The proposed rate increase of 2.5 percent is an average for all Washington employers. Individual employers will see their rates go up or down, depending on their recent claims history and any changes in the frequency and cost of claims in their industry.

Six public hearings scheduled

The public is invited to comment on the proposed rate increase at one of six public hearings:

  • Vancouver, Oct. 25, 9 a.m., Red Lion Hotel Vancouver at the Quay, 100 Columbia St.
  • Renton, Oct. 26, 1:30 p.m., Renton Pavilion, 233 Burnett Ave S.
  • Bellingham, Oct. 26, 1 p.m., Bellingham Public Library, Lecture Room, 210 Central Ave.
  • Richland, Oct. 27, 1 p.m., Red Lion Hotel Richland Hanford House, 802 George Washington Way
  • Spokane Valley, Oct. 28, 10 a.m., Spokane CenterPlace Event Center, 2426 N. Discovery Place
  • Tumwater, Oct. 28, 10 a.m., L&I Headquarters, 7273 Linderson Way

Written comments may be sent

Mail or email written comments to Douglas Stewart, stdu235@Lni.wa.gov, Employer Services Program Manager, P.O. Box 44140, Olympia, WA 98504-4140. Faxes may be sent to 360-902-4729. Written comments must be received by 5 p.m. on Nov. 4, 2011.

Q&A about rates

Why is L&I proposing a 2.5 percent rate increase?

The 2.5 percent increase in rates begins rebuilding our reserves, something the State Auditor and many businesses and workers have said we needed to do, without harming our economic recovery.

Without the recent reforms, we would have needed an 8 percent rate increase just to cover the costs of 2012 claims. To also begin restoring the reserves we would have needed a 10-14 percent increase without the reforms.

Proposed 2.5 percent rate increase is an average

The proposed rate increase is an average for all Washington employers. Individual employers will see their rates go up or down, depending on their recent claims history and any changes in the frequency and cost of claims in their industry.

To see how an industry or risk class is affected, see the 2012 base premium rate tables.

Here are some examples of different industries:

  • Building and construction trades… (6% increase)
  • Restaurants… (-1% decrease)
  • Agriculture… (3% increase)
  • Health Care… (1% increase)
  • Stores… (0%)

What is L&I doing to help employers meet their obligations?

L&I's Employer Assistance Program is here to help employers who are having trouble paying their premiums. We can set up a payment plan and in many cases we can waive late penalties and interest. L&I has already helped nearly 13,000 businesses since we started this program in 2009.

How can I learn my experience modification factor?

Your account manager can provide you with the calculation of your experience modification factor. Your account manager's name is on your quarterly report or you can call 360-902-4817.

Why did my rates go up when I've never had a claim?

In Washington State, employers with similar operations and exposures are grouped together in the same workers' compensation risk classification. Premium rates are based on the total costs for the risk class. Medical-treatment costs and wage replacement for lost work days drive up premium rates for an industry risk class, so if your risk class had higher costs, the rate will be higher.

Many of the risk classes with lower rates have smaller increases with some decreases, while risk classes with higher rates have higher rate increases. Why is this occurring?

The composite base rate for a class is the sum of four different rates: Accident, Medical Aid, Stay at Work, and Supplemental Pension. The Supplemental Pension rate for 2012 is 9.32 cents per hour, which is 13.6 percent lower than the 2011 rate. Because this is the common supplemental pension rate for virtually all risk classes, lower-rated classes will see a greater impact from this change than in the change of the other three parts of their composite rate.

For example, the Clerical Office, NOC class, has a 2012 composite base rate of 15.15 cents per hour, with 5.82 cents from the rates other than the Supplemental Pension rate, and because of this will see a 9 percent rate decrease.

Questions? Call us at 360-902-4817.

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