No increase for workers’ compensation rates in 2012

TUMWATER – Governor Gregoire and the Department of Labor & Industries (L&I) today announced there will be no overall increase in workers’ compensation insurance premiums next year.

In September, the agency proposed a 2.5 percent increase. The decision to hold overall rates flat in 2012 is due to public testimony about the impact of the recession and recent positive trends in claims duration, according to L&I Director Judy Schurke.

“At public hearings this fall, business owners told us they are struggling to keep doors open and workers employed, and that they can’t afford even a small increase in rates in this economy,” said Schurke. “Their feedback and the latest positive trends influenced this decision.”

“AGC thanks the department for listening to the concerns of contractors and keeping overall industrial insurance rates at current levels,” said Pat McGarry, President of the Associated General Contractors (AGC) of Washington. “Construction employment has decreased 35 percent over the last few years. Holding the line on workers’ comp rates will help get the construction industry back on track, allowing contractors to save jobs and assuring that workers won’t see even larger paycheck deductions. This will have positive ripple effects throughout the economy. This type of responsiveness from government is helpful.”

Based on the latest financial data, L&I is projecting its reserves will be 5 percent of liabilities by the end of the year. This is a higher percentage of liabilities held in reserve than the Workers’ Compensation financial statement reflected in September. However, it is still low by industry standards.

“Holding rates flat next year helps rate payers but if the financial situation worsens, it could mean higher rates in 2013. I considered this carefully and made the decision that helping businesses and keeping jobs for workers was the right thing to do,” Schurke said.

Schurke noted that the workers’ compensation reforms passed during the last legislative session will save $150 million in workers’ compensation premiums in 2012. This is part of the $1.1 billion in reform savings over four years.

While there will be no overall rate 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. L&I has published a rate table online and will soon send all employers a rate notice.

Washington is the only state where workers contribute a substantial portion of the premiums. Next year, their share will be about 24 percent.

The new rates take effect Jan. 1, 2012.

More than 100,000 workers in Washington State are injured on the job each year.  L&I must review premium rates annually and make adjustments to cover the anticipated costs of claims that will be filed in the next year.