After voters deny I-1082 in Washington, L&I announces increase in workers’ compensation rates
One of the most closely watched workers’ comp contests in the recent elections was on the ballot in Washington State: Initiative 1082, commonly referred to as a business-backed “measure that,” according to a Nov. 3 post at BusinessInsurance.com, “would have allowed private insurers to compete for employers’ business in the state’s workers compensation system.
“More than 58% of voters on Tuesday rejected Initiative Measure 1082, according to the Washington Secretary of State’s office. Washington is among four U.S. states that have a monopoly workers comp system.
“The Building Industry Assn. of Washington, along with insurance industry support, sought to end the Department of Labor and Industries’ [L&I] monopoly. Organized labor and trial lawyers opposed the initiative.
“The measure would have eliminated a Washington practice of requiring workers to pay a portion of workers comp premiums as well as allowed private insurers to sell policies.”
L&I announces average 12 per cent premium increase
About a week later, L&I announced a temporary rate hike averaging 12 per cent, making it seem pretty cut-and-dried that following a period of public discussion the increases will become permanent. In the Nov. 8 announcement, L&I stated: “The Department of Labor & Industries . . . today announced a 12 percent average increase in workers’ compensation insurance premiums. Average premiums would go up by 6.5 cents per hour worked.
“The new rates take effect Jan. 1, 2011, under an emergency rule that is effective for 120 days. L&I will hold public hearings in January to gather comments about the proposed increase before adopting permanent rates.”
Next stop for proponents: the Legislature
Proponents of I-1082 campaigned on the promise of cheaper rates by allowing private insurers to compete with the state-run program. Although disappointed, at least some vow to continue the long-running battle with a legislative approach in 2011.
According to a Nov. 3 Bloomberg Businessweek article, “Initiative supporters argued competition could reduce costs for employers in a time of great economic uncertainty.
“Kris Tefft of the Association of Washington Business said the results were disappointing and that business groups would try to reform workers’ comp through the Legislature next year.”
Increases not uniform, vary by sector
According to the Pugent Sound Business Journal, the rate hikes are not uniform across industries: “The emergency measure was necessary, L&I officials said, after changes were delayed due to the election; Washington state voters were asked whether they wanted to change the existing workers’ compensation system and voted down Initiative 1082.
” ‘I think it shows it was difficult to break down to voters what was at stake in Initiative 1082,’ Tefft said.”
“Some industries would pay more than others. Building construction and trades will see a 16 percent increase while restaurants will see a 6 percent hike.”
Background, perspective, and workers’ share of costs
A Nov. 10 piece at InsuranceJournal.com quotes L&I Director Judy Schurke in providing some background on the state’s situation, while placing it context of nationwide factors. It also says some employers might even see premium costs fall, and that workers are expected to pay about 24 per cent of the costs:
Every year in Washington, more than 100,000 claims are filed for medical costs and lost wages due to work-related injuries, illnesses and deaths. Each year, L&I must review premium rates and make adjustments to cover the anticipated costs of claims that will be filed in the next year, [Schurke] explained.
“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,” Schurke added.
The same economic factors that affect workers’ compensation insurers nationwide are impacting Washington’s State Fund:
- Injured workers are staying on benefits longer because there are fewer jobs.
- Less money is coming into the system because of fewer work hours.
- Medical costs and wages are up.
- Investment earnings are down.
The increase is an average for all Washington employers. Individual employers could see their rates go up or down, depending on their recent claims history and any changes in the frequency and cost of claims in their industry. L&I has published a rate table online and will soon send all employers a rate notice.
Washington is the only state where workers pay a substantial portion of premiums, about 24 percent of the 2011 proposed rate.
Opponents fought reduced payments by workers in nearly 100-year-old system
The winning side had campaigned on the idea that opening the door to private insurance competition would endanger a system that has been operated by the state since the early 20th Century. According to the Businessweek piece: “Opponents of the initiative said it would be a mistake to let profit-driven insurance companies into the workers’ comp market, which has been run under a public system in Washington since 1911. They also said that the estimated $315 million per year in reduced payments by workers would shift higher costs to employers.
” ‘It’s great feeling. It was a long and hard campaign but our main goal was for voters to read the fine print and see it would tax small businesses and hurt families,’ said Alex Fryer, spokesman for the initiative’s opposition. ‘It’s heartening to see voters rejected 1082 so forcefully.’ ”
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Frequently enough, a worker’s compensation case may be so complex as to demand legal representation. However, sometimes what seems like a cut-and-dried situation to an injured worker may result in a smaller award than envisioned–or even a denial. Have you, a friend or a loved one been injured on the job? Whether you’re merely seeking answers about your rights or believe a lawsuit may be necessary, be sure to seek counsel with attorneys trained and experienced in workers’ compensation. Here’s some resources:
