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Nov. 2, 1995

L&I approves $100 million rate cut for 1996

TUMWATER - Employers and their workers in Washington will get a $100 million break through a cut in 1996 premiums for workers' compensation coverage, the Department of Labor & Industries announced today.

Director Mark O. Brown approved the reduction following recent public hearings. The new rates take effect Jan. 1, 1996.

"This is good news for the economy of our state because the rate reduction will put $100 million into the wallets of workers and the tills of businesses," Brown said.

The $100 million premium cut is the result of the average 10 percent reduction that employers and their workers will pay for workers' compensation coverage.

The workers' compensation system in Washington covers 153,000 employers and 1.6 million workers and is managed by Labor & Industries. The system pays for lost wages, medical bills and pensions when employees are injured in the workplace.

Although the 10 percent cut is an average, some employers will see even larger reductions in rates based on their industry's risk class.

For example, logging will receive an 18 percent reduction in rates. In this class, employers in 1996 are expected to save $2,053 for each full-time employee. The worker will save $900.

In addition, individual employers within all industry classifications could see even larger reductions based on their recent history in preventing workplace injuries and illnesses. Rates are largely based on the level and severity of workplace accidents among employees.

In Washington, employers and employees split the cost of premiums for the funds that finance benefits for injured workers. Washington is the only state where workers pay for a portion of workers' compensation coverage.

Several factors led to the $100 million reduction for 1996:

  • A 5 percent drop in the number of claims. This continues the trend of recent years and helps reduce costs in treating injured workers.
  • Medical inflation of just 1 percent in the last year. This is significant because 40 percent of the department's costs are medical payments for injured workers, most for long-term care. Medical inflation in Washington just three years ago was 10 percent.
  • The Washington State Fund, from which workers' compensation benefits are paid, continues to perform well because of prudent management by Labor & Industries.

The department will continue efforts to form partnerships among labor, business and government to promote workplace safety and health, with a special emphasis on accident prevention.

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