Press Release

Olympia - Today the Department of Labor and Industries announced a 7.6 percent increase in workers’ comp system premiums for calendar year 2010, which will result in a $117 million cost increase for businesses. This marks the third year in a row premiums have increased and it is the largest increase since 2003 when state officials raised the rate 29 percent.

“It is troubling that the state continues to increase workers’ comp rates at a time when businesses can least afford to take the hit,” said Carl Gipson, small business research director for Washington Policy Center. “Claims are down 55 percent over the last 20 years but the department’s costs continue to increase.”

Since 2002, rates have increased or (decreased):

• 2001: (2.2%)
• 2002: 1.8%
• 2003: 29.2%
• 2004: 9.8%
• 2005: 3.7%
• 2006: (0.3%)
• 2007: (2%)
• 2008: 3.2%
• 2009: 3%
• 2010: 7.6%

This latest increase means workers’ comp premiums will have risen more than 53 percent in the past 10 years.

State law requires employers to carry industrial insurance and only a small portion of the state’s thousands of employers are allowed to self-insure. All others are required to use the state’s system. Currently the state program covers over 2.5 million workers and over 170,000 employers.

But other states have, or are looking at introducing private-sector competition in the area of industrial insurance. Last year, West Virginia privatized their workers comp insurance system and at the one-year mark the results were dramatic:

• Overall premiums have dropped 30 percent, or more than $150 million
• 198 different workers’ compensation insurance companies have filed rates and forms
• There are 120 policies in the residual market representing premiums of about $1.9 million
• More than 90 percent of all claims are ruled upon within the first 30 days
• Claim protests fell 68 percent
• The overall appeals process was streamlined resulting in claim disputes being resolved in a shorter period of time

Said Gipson, “policymakers would be wise to seriously consider opening our state’s workers’ comp system to competing entities. If we could save anywhere near the 30 percent in premium reduction West Virginia achieved, we could possibly see a half a billion dollar tax cut for our state’s employers and workers.”