No Increase in Washington Workers’ Comp Rate for 2013

The Department of Labor & Industries (L&I) announced it is proposing no increase in the average rate for workers’ compensation insurance. If adopted, this would be the second straight year with no increase in workers’ comp rates.

“Had the Governor and the Legislature not adopted the 2011 reforms, I wouldn’t be making this proposal today,” said L&I Director Judy Schurke. “In fact, without those reforms, we would be facing a rate increase. Instead, we’re able to keep rates down for Washington’s businesses and workers.”

Savings due to reforms are beating expectations. L&I is now projecting the reforms passed in 2011 will save $1.5 billion over four years, $300 million higher than originally estimated.

While the reforms play an important part in lowering costs, Schurke pointed to additional factors responsible for lower costs in 2013, including:

• Fewer claims in high hazard industries like construction are resulting in fewer long-term disabilities;

• Overall claim frequency, or the number of claims per 100 workers, has gone down by 6.2 percent;

• L&I has held medical cost growth below 4 percent over the past five quarters and expects continuing 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.

Today’s proposal would mean an additional $82 million is placed in the State Fund reserves by the end of 2013. In the past, the State Auditor issued strong warnings about the consequences of maintaining inadequate reserves. Schurke also acknowledged 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.

The Workers Compensation Advisory Committee (WCAC), which has been working with L&I on a plan to rebuild the reserves, endorsed L&I’s proposal to hold rates steady in 2013 and begin rebuilding the reserves.

Washington is the only state where workers pay a substantial portion of premiums. Workers will pay about 24 percent of the premiums in 2013.

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.

Every year in Washington, about 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 occur in the next year.

A series of public hearings on the proposed rates is planned.