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Sept. 21, 2009

L&I proposes 7.6 percent average increase in workers' compensation insurance premiums

TUMWATER – The Department of Labor and Industries (L&I) today announced lower workers’ compensation insurance premiums for 2010 than earlier forecasted.

In June, L&I advised the Workers’ Compensation Advisory Committee on a preliminary basis that an average increase of 15-20 percent might be necessary next year.

L&I Director Judy Schurke today proposed an average increase of 7.6 percent.

“I know that any increase adds to the challenges that businesses and workers face in this tough economy,” Schurke said. “We have pushed this proposed rate increase down to the lowest possible level given the uncertain state of our recovery from this deep recession.”

With a proposed increase of 7.6 percent, average premiums would go up by about 4 cents per hour worked. The state-run workers’ compensation system collects insurance premiums from businesses to cover costs for medical care and wage-replacement and pension benefits for workers injured on the job.

Schurke said there are three big factors related to the economy that affect rates:

  • Reduced investment returns.
  • Fewer premiums because of reduced hours worked.
  • Fewer jobs for injured workers to return to.

Recent health-care inflation of 8.5 percent and wage inflation of 3.4 percent are two other factors that affect next year’s rates.

Because Washington premiums are based on hours worked, L&I must explicitly adjust rates for wage inflation. Other states assess premiums as a percentage of payroll, so wage inflation is already accounted for when payrolls rise. The State Fund provides insurance to employers and workers at cost; the money to pay claims comes from premiums and investment revenue. No money comes from taxes that go into the state General Fund.

The proposed increase, which would bring in an additional $120 million, is an average for all Washington employers. Individual employers could 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. L&I will soon be publishing online the proposed 2010 rate tables by industry.

Washington’s workers’ compensation system is made up of three funds that provide benefits when workers are hurt on the job.

Under L&I’s proposal, the Accident Fund rate would increase 4.5 percent. Employers pay premiums in this fund. The Medical Aid Fund rate would go up by 8.4 percent, and the Supplemental Pension Fund rate would increase 16 percent. Employers and workers contribute equal premiums for the latter two funds. Self-insured employers, who fund their own medical and time-loss expenses for injured workers, are affected only by the increase in the Supplemental Pension Fund.

Washington is the only state where workers pay a substantial portion of premiums. Next year, their share would increase slightly and will be just over 28 percent if the proposed rates are adopted.

Final 2010 rates will be adopted in late November following six public hearings:

  • Tukwila: Oct. 27, 1 p.m., L&I Office, 12806 Gateway Dr.
  • Tumwater: Oct. 28, 10 a.m., L&I Headquarters, 7273 Linderson Way S.W.
  • Vancouver: Oct. 28, 10 a.m., Red Lion Inn at the Quay, 100 Columbia St.
  • Bellingham: Oct. 29, 1 p.m., Bellingham Quality Inn, 100 E. Kellogg Road
  • Spokane: Oct. 30, 9 a.m., Spokane Airport Ramada, 8909 W. Airport Dr.
  • Richland: Oct. 30, 2 p.m., Richland Hampton Inn, 486 Bradley Blvd.

Written comments, accepted through Nov. 7, may be e-mailed to Ronald Moore, Employer Services Program Manager, or mailed to him at the Department of Labor & Industries, P.O. Box 44140, Olympia, WA 98504-4140. Faxed comments should go to 360-902-4729.

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For media information: Steve Pierce or 360-902-5412.

Broadcast version: The Department of Labor and Industries today announced lower workers’ compensation insurance premiums for 2010 than earlier forecasted. In June, L&I said preliminary numbers showed a possible increase of 15-20 percent next year.

L&I Director Judy Schurke today proposed an average increase of 7.6 percent.

Schurke said: “I know that any increase adds to the challenges that businesses and workers face in this tough economy. We have pushed this proposed rate increase down to the lowest possible level given the uncertain state of our recovery from this deep recession.”

Public hearings are scheduled for late October in six locations around the state. More information is available on L&I’s Web site at LNI dot wa dot gov, then click on the “News and Media Center.”

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