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Dec. 14, 1995

Second cut adds $200 million more to premium rate break for employers, workers in 1996

OLYMPIA - Gov. Mike Lowry and Mark O. Brown, director of the Department of Labor & Industries, today announced the first "dividend" in the 84-year history of workers' compensation in Washington - a $200 million additional cut in 1996 premiums.

The benefit will affect 153,000 businesses and 1.7 million workers in the state who are covered by the workers' compensation system, which is managed by Labor & Industries.

The additional one-time $200 million reduction will take effect April 1, 1996, and last through Dec. 31, 1996. This temporary additional cut slashes rates for employers and workers by approximately 27 percent for the last nine months of 1996.

The added cut follows the 10 percent, $100 million general rate reduction announced in October, which takes effect Jan. 1, 1996, and applies for the entire year.

Lowry and Brown said returns from the workers' compensation system's stock investments fueled the additional across-the-board $200 million rate cut in the last three quarters of 1996.

"This is a $200 million infusion of money into our state's economy," Lowry said. "This will result in business expansion, creation of new jobs and additional consumer spending. This helps our already booming economy."

A strategic investment decision three years ago to move 11 percent of the workers'compensation investments into stocks has resulted in a $200 million windfall that Brown said "should be returned to employers and workers" through the nine-month rate reduction.

"The sound management of State Fund investments allows us to provide another benefit for our rate payers," Brown said. "We put our investments in the right place at the right time. And because L&I is non-profit, it is only fitting that we pass on this good fortune to ratepayers."

Even with the combined $300 million rate cuts for 1996, the system will retain sufficient reserves to meet anticipated future benefit costs. Workers' compensation pays for lost wages, medical bills and pensions when employees are injured in the workplace.

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