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State L&I calls for flat workers comp rates in 2013

Post by Jordan Schrader / The News Tribune on Sep. 17, 2012 at 2:05 pm |
September 17, 2012 4:43 pm

The state Department of Labor and Industries has potential good news for Washington businesses and employees.

The agency said today it has tentatively decided not to raise the insurance premiums it charges to cover workers who are injured on the job.

The final decision on 2013 premiums comes in December after a series of public meetings. But L&I says the money it expects to take in should be more than enough to cover projected costs — with $82 million left over to sock away in depleted reserves.

L&I gives much of the credit to bipartisan reforms enacted in 2011 after a debate that consumed much of that year’s legislative session. The agency said the changes are now expected to save $1.5 billion over four years, $300 million more than originally estimated. Without them, it said, it would have to raise rates 4 percent.

The decision affects the average rates, but rates paid by individual employers and their workers could go up or down in 2013.

L&I has a monopoly on workers-comp insurance in Washington, which has been fodder for the governor’s race. Republican candidate Rob McKenna wants to allow private competition and calls high workers-comp rates “an anchor dragging down job growth.”

UPDATE 4:45 p.m.: Reactions from McKenna and the Association of Washington Business both tout the success of the 2011 reforms.

McKenna’s campaign said in a statement he would bring the same kind of “reform-driving savings” to state government, without specifically mentioning more reforms for L&I.

AWB president Don Brunell, in his own statement, did say more is left to be done: “As we said at the time, the reforms were a great step forward and we look forward to working with the Legislature on further ways to improve our system and hold future rate increases down.”

Here’s the news release from L&I:

L&I proposes no increase in workers’ comp rate for 2013
No rate increase for second year in a row

TUMWATER –The Department of Labor & Industries (L&I) today 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.

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. The final rates will be adopted in early December and go into effect Jan. 1, 2013.

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