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Aug. 18, 2000

$20 million workers' comp premium rate cut proposed for 2001


TUMWATER - For the seventh consecutive year, the average cost for workers' compensation will not go up. The Department of Labor & Industries is proposing a 2.2 percent general reduction in workers' compensation premium rates for next year. That would equate to about a $20 million general rate reduction for 2001.

"Our workers' compensation system is working well. It's one of the best in America," Governor Gary Locke said. "Washington's employers and workers deserve no less than an affordable system that takes care of its workforce."

Today's announcement follows on the heels of returning $200 million in premium refunds to employers just two weeks ago. That refund was the second in two years, and was credited to good returns on State Fund investments for the fiscal year that ended June 30, 1999.

A 1998 legislative performance audit of the state's workers' compensation system reported that Washington pays higher-than-average benefits to injured workers - in the top 25 percent, at lower-than-average cost for employers - in the bottom 25 percent.

Labor & Industries manages the state's workers' compensation system - referred to as the State Fund. The State Fund is made up of several funds that provide benefits when workers are hurt on the job. It provides coverage for more than 163,000 employers and 1.9 million workers.

The 2001 proposal includes a 7.5 percent reduction in the Accident Fund. Premiums in the Accident Fund are paid entirely by employers. Those premiums provide wage and disability benefits.

There would be no increase in Medical Aid Fund premiums. That fund pays medical costs for injured workers. Employers and workers share equally in its premium payments.

The smaller Supplemental Pension Fund premiums would rise 14 percent, necessitated by the recent 8.4 percent cost-of-living increase to workers who are on pension or receiving time-loss benefits. Employers and workers contribute equal premiums for this fund.

The proposed adjustments to the three funds would result in a 2.2 percent over-all general rate reduction. Since 1998, the workers' compensation system has issued premium refunds and cut rates totaling $469 million, not including the 2001 proposal.

"We're enjoying some great returns on our investments," said L&I Director Gary Moore. "We can confidently make these reductions and have enough reserves for our anticipated benefit costs."

Public hearings on the rate proposal are set for:

  • Spokane
    10 a.m. Nov. 2
    Labor & Industries, Conference Room 4
    901 N. Monroe St., Suite 100
  • Tumwater
    10 a.m. Nov. 3
    Labor & Industries, auditorium
    7273 Linderson Way SW

The proposal for 2001 is an average for all industry groups. Some employers may see decreases and others increases depending on their industry classification and their own claims history.

If approved, the new premiums would become effective Jan. 1, 2001.

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(Also see this follow-up press release)

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