State proposes 5 percent drop in workers’ compensation rates; should it be lower?

The Washington State Department of Labor and Industries is proposing a 5 percent decrease in workers’ compensation premiums for 2019.

L&I attributes the proposed decrease to several factors, including declining workplace injury rates, along with L&I initiatives that are helping injured workers recover sooner and reducing workers’ compensation costs.

The proposed rate decrease means employers would pay about $58 less a year per employee for workers’ compensation coverage in 2019. Employees would pay an average $6 less per year for their share under the proposal.

The 5 percent, the department notes, is an average; some employers could see smaller or larger decreases and some could see an increase, depending an industry and claims history.

The Seattle Times report on the proposal includes a comment on recent history.

It would mark the second straight year of decreases in the rate for an insurance system that provides medical care, disability and wage benefits for people hurt at work and for the families of those killed, and which has long been a punching bag of businesses for its costs and complexity.

The rate decrease, which would be the largest since 2007, is a far cry from what state officials were predicting half a decade ago, when lingering effects of the Great Recession threatened to cause average rates to rise into the 2020s, even after a major legislative reform package passed in 2011.

The L&I director is quoted on the 2011 reform legislation.

Sacks said programs implemented as part of the 2011 reform are also reducing the system’s long-term costs, including one that provides employers subsidies to help injured workers return to work faster with light duties during their recovery.

Association of Washington Business president Kris Johnson says in a press release that a greater reduction may be warranted.

“Employers welcome any reduction in the cost of Washington’s workers’ compensation insurance, which remains among the most expensive in the country. We have worked diligently with our members to improve workplace safety and the proposed 5 percent average reduction is a move in the right direction. But with a growing economy and growing reserve fund, the reduction could have been even greater and still maintained break-even for the state’s reserve fund.

“While parts of Washington’s economy are performing well, the recovery has not extended equally throughout the state or across all industries. We look forward to continuing to work with lawmakers and others to make Washington’s workers’ compensation more competitive, to reduce costs for employers who are still struggling and to bring economic prosperity to every corner of the state.”

In her post on the proposal, Emily Makings with the Washington Research Council writes,

The Department of Labor & Industries has proposed that average workers’ compensation rates decrease 5 percent next year. According to L&I, this means that premiums paid would drop by a total of $136 million…

Workers’ compensation benefit costs in Washington have been the highest in the country in recent years.

The link is to an October 2017 WRC report, which illustrates the system’s high costs.

Last week the National Academy of Social Insurance (NASI) released its annual report on workers’ compensation benefits, coverage, and costs across states. For 2015 (there’s a two-year lag), Washington’s benefit costs were $788.62 per covered worker. This was the highest in the country, followed by California ($751.70) and Alaska ($719.93). Although Washington’s benefit costs have been the highest in the country since 2008, they have been declining since 2010, when they reached $865.67 per worker.

Benefit costs as a percent of covered wages in Washington were 1.40 percent in 2015, the fourth highest in the country.

We consider benefit costs to be the best measure of the worker’s compensation system’s costs as well as the most straightforward way to compare costs across states, as we explain in this report

Still, as Johnson mentions, employers will welcome the relief. 

For those who want to comment on the proposal, L&I has scheduled the following opportunities.

The agency will hold three public hearings where people can learn about and comment on the proposed rates. The hearings are scheduled for: 

  • Tumwater, Oct. 30, 9 a.m., Dept. of Labor & Industries Headquarters.
  • Tukwila, Oct. 30, 1 p.m., Dept. of Labor & Industries Tukwila Office.
  • Spokane Valley, Oct. 31, 9 a.m., Spokane CenterPlace.

People can also comment in writing to Jo Anne Attwood, administrative regulations analyst, PO Box 41448, Olympia, WA 98504-4148; or email Joanne.Attwood@Lni.wa.gov. All comments must be received by 5 p.m. Nov. 2, 2018.