Washington’s Department of Labor & Industries (L&I) has announced a 12 percent average increase in workers’ compensation insurance premiums for 2011. Average premiums would go up by 6.5 cents per hour worked.
The new rates take effect Jan. 1, 2011, under an emergency rule that is effective for 120 days. L&I will hold public hearings in January to gather comments about the proposed increase before adopting permanent rates.
Earlier this year, the Governor asked L&I Director Judy Schurke to convene a business and labor workgroup to recommend improvements to the state’s workers’ compensation system. Some business groups, including those in the insurance industry, had hoped to allow private insurers to enter the workers’ comp market, to spur competition and bring rates down. But, voters rejected that idea, I-1082, in the Nov. 2, 2010, election.
“In the meantime, we can’t ignore the fact that the severe, persistent recession has increased workers’ comp claims costs. We’re able to hold down the rate increase to 12 percent largely because L&I has aggressively cut costs, including our own budget, by over $200 million,” Schurke said.
Every year in Washington, more than 100,000 claims are filed for medical costs and lost wages due to work-related injuries, illnesses and deaths. Each year, L&I must review premium rates and make adjustments to cover the anticipated costs of claims that will be filed in the next year, she explained.
“We’ve taken many steps to reduce costs in our claims-management process, such as keeping prescription drug costs to less than half of the national average. But it isn’t enough to overcome the negative impact of the economy,” Schurke added.
The same economic factors that affect workers’ compensation insurers nationwide are impacting Washington’s State Fund:
Injured workers are staying on benefits longer because there are fewer jobs.
Less money is coming into the system because of fewer work hours.
Medical costs and wages are up.
Investment earnings are down.
The increase 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 has published a rate table online and will soon send all employers a rate notice.
Washington is the only state where workers pay a substantial portion of premiums, about 24 percent of the 2011 proposed rate.