Oregon Touts Comp Premium Rate Cut, Washington Awaits Election Day

Washington State can't propose 2011 workers' comp rates until the voters have passed or rejected Initiative 1082 on Nov. 2. It would let private insurance carriers write comp insurance and also would change how Washington determines premium rates.

Washington State's Department of Labor & Industries announced Sept. 15 that it will propose workers' comp rates for 2011 after the Nov. 2 election because the rates depend on whether voters pass Initiative 1082, which would allow private insurance carriers to write comp insurance in Washington. More importantly, the initiative would be effective immediately and would change how Washington determines premium rates. The current system calculates rates based on hours worked, but Initiative 1082 would require employers to pay premiums based on a rate for every $100 of payroll they pay workers.

"To be most fair to businesses, our rates proposal needs to be based on the decision that voters make on Nov. 2," L&I Director Judy Schurke said.

The recession is another factor; L&I said it continues to analyze data that can affect the rate it estimates is needed to pay the cost of claims that occur in 2011, and the amount of work being done by different industries plays into this. Because construction employment has dropped and this sector has higher costs for comp, this would affect the lifetime costs of disability claims that must be considered in establishing rates.

Meanwhile, Oregon touted $18.2 billion in employer savings since 1990 when it announced on Sept. 8 a 1.8 percent decrease in the pure comp premium rate for 2011. The savings have added up because the rate has not increased since 1990 and has dropped by nearly 13 percent since 2006, the Oregon Department of Consumer and Business Services (DCBS) said. The agency is proposing a 1.8 percentage point increase in comp premium assessment, which funds administration of the workers' comp and workplace safety system. DCBS said this increase "will partially offset the impact of the economic downturn on DCBS revenue."

"A strong, stable workers' compensation system is especially important to businesses during difficult economic times," said Oregon Gov. Ted Kulongoski. "Year after year, our system in Oregon delivers results, with safer workplaces, reduced litigation, and improved benefits -– all at a low and predictable cost."

The pure premium rate is the base rate employers pay to their insurance company for workers' comp coverage.

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