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December 5, 1996

L&I adopts new workers' compensation premium rates for 1997

TUMWATER - The Department of Labor & Industries will adopt 1997 premium rates that reflect no general increase for what employers and their workers will pay for workers' compensation coverage.

This marks the second time in the last three years that L&I has adopted no general rate increase and follows a $300 million reduction in rates for 1996.

"We've seen two years with zero general rate increases and last year with a huge reduction," said L&I Director Mark O. Brown. "This is a record unmatched anywhere in the U.S., including both private and public workers' compensation insurers."

On Jan. 1, 1996, the department instituted a 10 percent general rate reduction. That cut remains in effect in 1997. That decrease, together with the no-general-rate-increase, translates into a $130 million premium giveback to employers and workers that continues through 1997.

Washington has moved up to ninth-lowest in total costs for workers' compensation, according to a new study by the Oregon Department of Consumer and Business Services. That is an improvement from being 11th-lowest in 1994. Employer costs, which average 75 percent of total costs, now rank lowest in the nation.

Last April 1, the department issued a temporary, one-time across-the-board 27 percent rate cut for the last three quarters of this year. That temporary reduction to draw down reserves ends Dec. 31, 1996.

The new rates for 1997 take effect Jan. 1. At that time, employers will see general rates return to levels of the first quarter of 1996, with experience factors and risk class rates adjusted based on each employer's recent claims history.

The workers'compensation system in Washington covers 154,000 employers and 1.6 million workers and is managed by L&I. The system, referrred to as the State Fund, pays for lost wages, medical bills and pensions when employees are injured in the workplace. Benefits are financed through premiums paid by employers and workers and investments made by the department.

Even though no general rate increase is proposed for 1997, the State Fund will remain financially strong with sufficient reserves to meet anticipated claims costs in the future despite 1996 and 1997 reserve drawdowns.

The department had a public hearing on the 1997 rates in October.


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