Proposed 2013 Workers' Comp Rates Low

Thanks to safer jobsites and the workers comp reforms pushed by AGC 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.

Note that the average increase is zero but the proposed increases for individual construction classifications differ ranging from an 8% decrease for machinery installation service and repair to a 9% increase for excavation road construction and land clearing. For the list of proposed 2013 construction classifications click here.

After public hearings (see dates below) the final rates will be adopted in early December and go into effect Jan. 1 2013.

“AGC members can see the positive results of the workers comp reforms that they helped enact into law last year said AGCs Government Affairs Director Rick Slunaker. The reforms actually saved about $162 million in the rate calculations dropping the projected rates downward. This makes possible an even more important effort: the rebuilding of the Fund’s reserves. There is no question that the reforms are working and giving momentum to additional reforms in the upcoming legislative session.

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 L&I Director Judy 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.

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 worked with the department over the summer to craft a ten-year plan to replenish the shrunken reserves. The first step takes advantage of the cost savings realized from the reforms by placing about half ($82 million) in the State Fund reserves by the end of 2013 resulting in the 0% projected average rate increase. The ten year plan will rebuild the Reserves to about 14% of State Fund liabilities with estimated rate increases of about 4 to 5.5% over the years. Upon completion of the plan rate increases are assumed at 3.5%.

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

Every year in Washington about 100000 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.

Public hearings on the proposed rates will be held in:

Tukwila Oct. 23 10 a.m. L&I office.
Bellingham Oct. 23 1 p.m. Public Library Lecture Room.
Spokane Oct. 24 10 a.m. CenterPlace Event Center.
Richland Oct. 25 10 a.m. Community Center Activity Room.
Tumwater Oct. 26 10 a.m. L&I Auditorium.
Vancouver Oct. 29 10 a.m. Red Lion at the Quay Quayside Portside Room.

More information regarding the rate proposal is available at www.Rates.Lni.wa.gov.