Last week, the Washington Department of Labor and Industries (the “Department”) announced that it will increase workers’ compensation insurance premiums on average by 12 percent, or 6.5 cents per hour worked. The Department issued the emergency rule effective January 1, 2011 after voters in the State of Washington rejected Initiative 1082 (“I-1082”) earlier this month (see previous post here) that would have allowed for the privatization of workers’ compensation insurance. Due to the rejection of Initiative 1082, the Department will remain the only issuer of workers’ compensation insurance in the State of Washington.

The Director of the Department, Judy Schurke, indicated that, similar to other workers’ compensation insurers nationwide, the economic recession is impacting the Washington State Industrial Insurance Fund. According to the Department, the economic recession has increased workers’ compensation insurance due to the following:

  • Injured workers staying on benefits longer because there are fewer jobs;
  • Less money flowing into the system because of fewer work hours;
  • Increased medical costs and wages; and
  • Reduction in investment earnings.

Director Schurke indicated that although the Department has reduced costs, such reductions have not been sufficient to combat the rising costs of workers’ compensation claims. Director Schurke stated, “We can’t ignore the fact that the severe, persistent recession has increased workers’ comp claims costs . . . . We’ve taken many steps to reduce costs in our claims-management process, such as keeping prescription drug costs to less than half of the national average. But it isn’t enough to overcome the negative impact of the economy.”

The emergency rule will be effective for 120 days and the Department plans to adopt a final rule in January. Before adopting the final rule, the Department will hold public hearings, currently scheduled for January 4, 2010 in Tacoma and Spokane Valley. Written comments relating to the proposed rate increases can also be submitted to Ronald Moore by email at MOOA235@LNI.wa.gov, Employer Services Program Manager, by regular mail at the Department of Labor & Industries, P.O. Box 44140, Olympia, WA 98504-4140 or by facsimile to 360-902-4729. The deadline for written comments is 5 p.m., January 4, 2011.