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Wash. state plans to rebuild workers comp fund, rate hikes unclear


OLYMPIA, Wash.—The Washington Department of Labor & Industries is looking to build its reserve fund for workers compensation claims, but it's not yet clear whether the plan will result in a rate hike next year, the department said.

Labor & Industries is Washington's monopoly workers comp insurer. Vickie Kennedy, chief policy advisor for the department, said the state has discussed about 24 workers comp rate scenarios for 2013 that would allow the fund to increase its workers comp contingency reserves.

A report earlier this week by the Seattle Times said those options include a possible workers comp rate increase between 7.8% and 28.6% next year. The options have been presented during public meetings with the state's Workers' Compensation Advisory Committee.

Labor & Industries' 2013 rate proposal will depend on a “break-even” rate recommendation from its actuaries, set to be issued at the end of August, the department said.

Labor & Industries theoretically could propose no rate increase for next year if its actuaries issue a negative rate indication, Ms. Kennedy said.

“In all honesty, we don't know what our 2013 rates are going to be” yet, she said.

Washington’s contingency fund stood at $622 million, or 5.2% of the state’s workers comp claim liabilities, as of March 31. Ms. Kennedy said the state aims to rebuild the fund to at least 9% or 10% of its liabilities.

The fund was depleted during the recession because of decreased reserve investment returns, longer workers comp claims durations, higher claim costs and a decrease in hours worked by Washington workers, which is used by the state insurer to set workers comp premiums, the state has said.

During the last three years, the department also used $332 million from contingency reserves to partially fund workers comp premiums and limit rate increases.