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No overall rate increase for workers' comp rates in 2013

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The Department of Labor & Industries (L&I) today proposed no increase in average rates for workers' compensation insurance for the second year in a row.

Since 2006, average annual workers’ comp rates have increased less than 3% per year, lower than the rate of inflation.

The proposal to keep rates flat in 2013 is an average for all Washington employers. Individual employers may see their rates go up or down, depending on their recent claims history and changes in the frequency and cost of claims in their industry.

Most frequently asked questions

What determines the rates that individual employers will pay?

While the average workers' comp rate for 2013 will not increase, individual employers may see their rates go up or down, depending on their recent claims history and changes in the frequency and cost of claims in their industry.

Why is the overall proposal for no increase?

Savings due to reforms are beating expectations. L&I is now projecting the reforms passed in 2011 will save $1.5 billion over 4 years, $300 million higher than originally estimated. Other factors responsible for lower costs in 2013, include:

  • Fewer claims in high hazard industries like construction are resulting in long-term disabilities.
  • Overall claim frequency, or the number of claims per 100 workers, has gone down by 6.2%.
  • L&I has held medical cost growth below 4% over the past 5 quarters and expects to continue to do so in 2013 with the new provider network and health technology assessments.
  • L&I is resolving claims more quickly as a result of Lean and other improvements.

What reforms were passed in 2011?

There were several, including:

  • Stay at Work, which provides employers with financial incentives to keep an injured worker on the job in light duty.
  • Medical Provider Network, which allows L&I to work with medical providers to improve care for injured workers.
  • Structured Settlements, which gives older injured workers a new option for financial support in the case of a long-term injury. 

What is the status of the workers' comp reserves and how will the proposal for no increase in average rates affect the reserves?

The reserves are critically low by industry standards due to increased liabilities, investment losses and drawing down the reserves to hold down rates during the recession. In the past, the State Auditor issued strong warnings about the consequences of maintaining inadequate reserves.  Today's rate proposal would mean an additional $82 million is placed in the State Fund reserves by the end of 2013.

What impact did the reforms have on 2013 rates?

Without savings from the reforms, we would be facing a rate increase.

Without the reforms, the 2013 break-even rate would have been about 4% instead of minus 4.2%. The break-even rate is the amount needed to cover projected costs for the next year. L&I will use the difference between the break-even rate and zero – $82 million – to begin restoring the workers' comp reserves.

Who pays workers' compensation premium rates?

Washington is the only state where workers pay a substantial portion of premiums. In 2013, workers will pay 24% of the premiums and the remaining 76% will be paid for by employers. 

How do Washington's rates for workers' compensation compare to other states?

When calculated as a percentage of payroll, which is how rates are calculated in other states, the proposed 2013 overall rates would be a 2.2% reduction.

How can I learn more about the proposed rates for 2013?

The best way to learn about the proposed rates is to attend a public hearing.  These hearings give you an opportunity to learn about the proposed rates and voice an opinion. Below is the hearings schedule:

  • Tukwila, Oct. 23, 10 a.m., L&I office
  • Bellingham, Oct. 23, 1 p.m., Public Library Lecture Room
  • Spokane, Oct. 24, 10 a.m., CenterPlace Event Center
  • Richland, Oct. 25, 10 a.m., Community Center Activity Room
  • Tumwater, Oct. 26, 10 a.m., L&I Auditorium
  • Vancouver, Oct. 29, 10 a.m., Red Lion at the Quay, Quayside Portside Room

In addition to attending a hearing, how can I learn more about the proposed rates?

Two areas of the L&I website offer more information:

When will we know about final rates for 2013? 

Final rates for 2013 will be announced in early December 2012. 

If I'm an employer, how will I find out what my final rates for 2013 will be?

New rate notices will be mailed to employers in the first week of December 2012. 

Questions?

Call us at 360-902-4817, or email PublicAffairs@Lni.wa.gov.

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