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The average rate employers in Washington state pay for workers compensation insurance will increase by 2% on Jan. 1, the state Department of Labor & Industries said.
The average 2% rate increase is less than half the state’s most recent wage inflation rate of 4.2%, partly because of significant cost savings by Labor & Industries, the department said in a Tuesday statement.
Labor & Industries, Washington’s monopoly workers comp insurer, uses wage inflation to help determine workers comp rates since the cost of providing coverage increases as wages rise, according to the statement.
In addition to covering the cost of wage replacement, disability benefits and medical treatment for occupational injuries, the average 2% rate hike will also go toward building reserves, the statement says.
“Low increases and predictable rates help avoid surprises and allow businesses to better budget for their workers compensation costs,” the department said in the statement, noting that the increase comes out to a little more than an additional $0.01 per hour worked.
Since the rate increase is an average, employers with safe workplaces and low claims costs could see smaller increases or lower rates, while employers with higher claims costs could see more than a 2% increase, the statement says.
“The new rates strike a balance between keeping the premiums as low as we can, while making sure we have a system that’s economically healthy and ready to help workers and businesses when they need it,” Labor & Industries Director Joel Sacks said in the statement.
Private workers compensation insurers increased reserve funds last year as their aggregate combined ratio fell below 100% for the first time in nearly a decade, but observers remain concerned about the industry's overall loss reserve position.