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Questions About the 2018 Premium Rates

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Workers' Compensation Premium Base Rates

1. Why did L&I adopt a 2.5% decrease for 2018?

L&I attributes the decrease to several factors, including employers and workers focusing on safety, and L&I initiatives that are helping injured workers recover sooner and reducing workers' compensation costs.

Additionally, small rate increases in recent years and the improved economy have helped build reserves, allowing for the rate decrease. In the last five years, the average annual workers' compensation rate increase has been under 1%. This is the first decline in the hourly rate since 2007.

Rates for Individual Employers and Employees

2. Why are rates for many businesses different from the 2.5% decrease?

The 2.5% decrease is an average. Individual employers may see their rates go up or down, depending on their recent claims history and changes in the frequency and cost of claims in their industry risk classes. Those changes also can increase or lower premiums paid by workers because workers in Washington pay a portion of the total premium. Go to to see the changes for all risk classes.

3. How much will the rate decrease save employers?

The 2018 decrease would save employers an average of about $34 a year per employee.

4. What percent of the premiums do workers pay?

Workers pay on average about 25% of the premium, a similar percentage to that paid in 2017. The actual percentage depends on the classification of the worker's company and its recent claims history. Washington is the only state where workers pay a significant portion of the premium.

The total rate is made up of four rates that provide benefits when workers are hurt on the job: the accident rate, the medical aid rate which pays for medical care and vocational services, the supplemental pension rate which pays for cost-of-living adjustments for long-term time-loss and pension recipients, and finally the Stay at Work rate which pays for employer financial incentives to keep workers on light-duty jobs while they heal.

Workers contribute one-half of the premiums for the medical aid, Stay at Work Program and supplemental pension rates. Employers pay for all the accident rates, which pays for wage replacement, partial and permanent disability benefits.

5. How many risk classes will have lower workers' comp rates next year?

Out of the state's 324 risk classes, 243 will have lower base rates in 2018.

The supplemental pension rate is increasing 7.3% to 10.3 cents per hours. For many of the lower-rated risk classes, the supplemental pension rate is a significant portion of the rate and will cause an overall increase to the class rate even though other parts of the rate are decreasing.

6. Why do my rates go up if I haven't had a claim?

Risk is pooled across all of the risk classifications, which helps keep premiums stable for all while helping those who have had a tough year. So even if a business has an excellent safety and return-to-work program with no injury claims counting against their experience factor, their rate could go up if the rate for the risk class is increasing.

Maintaining a safe work environment and helping injured workers heal and return to work quickly and safely does have a return on investment. When costs are lower across a risk class, all employers in the class benefit.

7. Does L&I offer a discount on rates?

Yes. L&I offers employers a Claim-Free Discount that can lower their average base rate by 10% or more.  Learn more at

Help for Employers

8. What can I do as an employer to reduce my rates?

As rates are based on the risk classifications assigned and your experience factor, you can help control your insurance claim costs which in turn may affect the experience factor. Visit for a list of resources that L&I offers to help employers control premium costs.

9. What if I need help paying my workers' comp premium?

In times of need, L&I's Employer Assistance Program allows an employer with a good payment history to ask for a 90-day "same as cash" payment plan, with no interest or penalties. Learn more and find out if you qualify at

Rates History/Comparisons

10. How have L&I's rates changed over time?

The chart below (red line) shows how rates have changed over the past two decades. L&I's goal is to use wage inflation as a benchmark for steady and predictable rates. Wage inflation is a good benchmark because workers' comp costs increase as wages increase.

The following chart shows a comparison of wage inflation and L&I rate changes over time.

Chart showing a comparison of wage inflation (green line) and L&I rate changes (red line) over time

Green line indicates wage inflation rate known when rates were set. Red shaded boxes indicated rate holiday or dividend.

11. Why are Washington's rates based on "hours worked" rather than a "percentage of payroll," which is how all other states charge for workers' compensation premiums?

Washington's current system, which charges premiums based on the worker's exposure to the risk of injury (hours worked), was established many years ago. This system doesn't negatively impact employers who pay higher wages.

Trust Funds/Contingency Reserves

12. How financially stable are Washington's workers' comp trust funds?

The accident, medical aid, and pension funds have enough financial assets to cover the expected benefits that will be paid over the long term to workers who have already been injured.

Consistent with insurance principles, L&I also tries to keep additional assets (contingency reserve) above the amount of these liabilities in order to cover unexpected future events that will likely occur. Unexpected events include downturns in the economy that may affect fund investments and opportunities for workers to return to work, court decisions that may increase future benefits, or natural disasters that affect workplaces.

L&I keeps a lower contingency reserve than other workers' compensation insurers, including other state workers' compensation funds. The private insurance industry and other state funds have, on average, a surplus of between 30% and 60% above their liabilities. As of March 31, 2017, the Washington State Fund had about 15.7% above liabilities, well below that of other insurers.

13. Why is L&I reducing the pension discount rate?

Because pensions get paid over the lifetime of each injured pensioner and their other beneficiaries, the law allows L&I to discount pension annuities when they get initially funded to anticipate future investment income. As investment yields have been declining for many years, we have begun to reduce the rate we use to discount future pension payments.

Currently, we have reduced the pension discount rate to 6.2% and we anticipate reducing it further to 4.5% over time.

Cost-Cutting Reforms and Initiatives

14. What is L&I doing to control costs?

In recent years, L&I has been providing vocational support and assistance much earlier in claims. It's helping reduce long-term disability and improving return-to-work results for those hurt on the job. The agency's Stay at Work Program is also making a difference, providing employers more than $58 million to help keep more than 25,000 workers on light duty while they heal.

L&I has several initiatives underway that are lowering costs by focusing on better outcomes for injured workers. Some examples include promoting workplace safety, ensuring injured workers receive quality health care, providing vocational services to workers and supporting employers who want to keep injured workers on a job.

In the last four years, these and other improvements have resulted in a more than $1.7 billion reduction in projected long-term costs for the workers' compensation system.

15. How has the increased focus on safety in the workplace affected workers' comp costs?

Expenses associated with long-term disabilities and fatalities make up the majority of costs covered by premiums in the workers' comp system. The best way to control costs is by creating safe workplaces to avoid injuries, illness or death.

Inspection and consultation activities by L&I's Division of Occupational Safety and Health (DOSH) make a significant contribution to reducing claim rates and costs. Studies show that employers receiving a safety inspection or safety consultation decrease the number of claims filed by their workers by 10% to 30%.

16. What is L&I doing to deter fraud and ensure employers pay their fair share of premiums?

L&I makes employers, workers and health care providers think twice about committing fraud. The program uses systematic and innovative approaches to detect and deter fraud and abuse.

Last fiscal year, L&I:

  • Assessed $25 million in unpaid employer premiums plus penalties.
  • Collected a total of $191.3 million in delinquent money, of which $173.3 million came from unpaid employer premiums.
  • Audited 3,661 employers, of which 824 were unregistered.
  • Followed up on 3,859 requests to investigate claims.
  • Found 144 cases of worker fraud and criminally prosecuted 5 of those.

To learn more or to report fraud, visit

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