OLYMPIA, Wash.—Business groups and other proponents of a Washington voter initiative that would eliminate the state's monopoly workers compensation system this week expect to turn in enough signatures to put the issue on the November ballot.

Initiative 1082 would allow private workers comp insurers to compete against the State Fund administered by the state's Department of Labor & Industries, which provides coverage for about 171,000 employers.

Washington, Ohio, North Dakota and Wyoming are the only four states with monopoly workers comp systems. Washington's is unusual because employees contribute to workers comp premiums and rates are based on hours worked rather than a percentage of payroll, as is common in other states.

The ballot initiative would end the worker contributions.

“It's going to be the granddaddy of fights between business and labor unions and trial attorneys,” said a spokeswoman for the Building Industry Assn. of Washington, which filed the initiative with the state's Secretary of State in April.

The Secretary of State's office confirmed last week that initiative supporters have a July 2 appointment scheduled to hand in the necessary signatures. About 241,000 registered voter signatures must be submitted by July 2 to qualify for the ballot. The BIAW spokeswoman said supporters plan to submit 300,000 signatures.

Opposing sides already are setting out their positions, and the debate is heating up.

A spokeswoman for the Washington State Labor Council, AFL-CIO said: “We really think this will not be good for workers in Washington with big insurance controlling (coverage),” the spokeswoman said. “It's bound to have detrimental effects because, with our state system, we don't have to subsidize the profits of big insurance agencies.”

The BIAW, in communications aimed at garnering initiative support, calls premium increases tax hikes and, in a blog posting, said “there is virtually no dispute that the Department of Labor & Industries runs one of the worst industrial insurance programs in the country.”

Initiative supporters say state lawmakers have failed to implement reforms adopted in other states and Washington businesses saw a 7.6% average premium increase this year while other states are experiencing premium decreases.

A Department of Labor & Industries spokeswoman said a state ethics law prohibits agency personnel from commenting on the ballot initiative.

But the department's website shows clear differences with BIAW's position, which is supported by several local chambers of commerce and the Olympia, Wash.-based Assn. of Washington Business.

While BIAW says claims filed in Washington have an average loss-time duration of 270 days, the department says the median loss-time duration is 40 days.

The median duration is more accurate because the department does not purchase reinsurance for the State Fund, so it retains severe claims on its books longer than is typical for insurers, said Robert Malooly, assistant director for insurance services at the department in Olympia.

Additionally, state law prohibits closing claims through compromise and release arrangements. Those factors mean a small group of severe claims skew the loss-time average, Mr. Malooly said.

The BIAW also touts a Dec. 31, 2009, State Auditor report finding that Washington's Accident Fund, which pays nonmedical claims expenses, faces a 74% chance of insolvency within two years and a 90% chance within five years.

According to Department of Labor and Industry documents, the audit report was mischaracterized in a newspaper editorial, leaving the impression that the entire system was in danger of insolvency.

The 2009 audit report states that Accident Fund contingency reserves “declined substantially” due to the recession, increased loss adjustment expenses, and insufficient premium rates in 2008 and 2009. But the Accident Fund would have sufficient assets to pay claims and perform day-to-day services; although, contingency reserves have a potential of falling below zero, the audit report states.

Mr. Malooly also said that assessing premiums on hours worked rather than on a percentage of payroll means Washington's rates have not included an amount for wage inflation. Its rate increases, therefore, essentially keep the system in line with other states' levels, Mr. Malooly said.

The American Insurance Assn. and the Property/Casualty Insurers Assn. of America say they support the initiative effort. They have not contributed resources but are weighing doing so.

Generally, states have eliminated monopoly workers comp insurance systems rather than create new ones, and a state Senate-created task force in Ohio is investigating the possibility of opening that market to competition, said Bruce C. Wood, the AIA's associate general counsel and director of workers compensation.

“I think the historical record is clear that private markets produce the most efficient allocation of resources and certainly a stable insurance environment,” Mr. Wood said.