No overall increase for workers' comp rates in 2013

November 30, 2012

The Department of Labor & Industries (L&I) today announced there will be no overall increase in workers’ compensation insurance premiums in 2013. This is the second year in a row that L&I has held overall rates flat.

While there will be no overall rate increase in 2013, 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.

For more information:

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 there no increase in the average rate?

Factors responsible for lower costs in 2013, include:

Fewer claims in high hazard industries like construction are resulting in long-term disabilities
Claim frequency has decreased
L&I has held medical cost growth to around 4% over the last year 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 contingency reserves and how will no increase in average rates affect the contingency reserves?

The contingency reserves are critically low by industry standards due to increased liabilities, investment losses and drawing down the contingency reserves to hold down rates during the recession. In the past, the State Auditor issued strong warnings about the consequences of maintaining inadequate contingency reserves. A zero average rate increase will mean an additional $82 million is placed in the State Fund contingency 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 contingency 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.

What is the 2013 overall change in Washington rates as a percentage of payroll?

When calculated as a percentage of payroll, which is how rates are calculated in other states, the 2013 overall rates would be a 2% reduction.

How can I learn more about rates?

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

Find the final rate for your assigned risk class.
www.ControlMyRates.Lni.wa.gov provides a list of resources that L&I offers to help employers control premium costs.

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

Labor & Industries (L&I), Washington State