L&I Announces 2018 Premium Rate Proposal

Sept. 20, 2017


The Department of Labor & Industries has announced an overall average premium rate reduction for 2018, citing safer workplaces, fewer accidents, and favorable development of workers' comp claims.

In all, the Department would propose to lower rates an average of 2.5 percent next year.

The 2.5 percent reduction is an average of a 4.5 percent reduction in the Accident Fund premium, a 3.5 percent reduction in the Medical Aid Fund premium, but a 7.3 percent increase in the Supplemental Pension Fund premium assessment. 

The Supplemental Pension Fund is the pay-as-you-go fund that covers cost of living adjustments for pensioners, which are calculated based on year-over-year wage inflation in Washington. Wage inflation was almost five percent this past year. 

According to Department officials, favorable economic and insurance trends for the State Fund yielded an actuarial "break even" rate 5.9 percent lower than 2017 premiums, meaning in theory the Department could have proposed to reduce rates by 5.9 percent and still covered forcasted benefits and administration next year.

Choosing a lower reduction allows the Department to continue building contingency reserve levels which, while up this year on a favorable stock market, are lower than what most workers' comp insurers or state funds hold.

That the 2.5 percent reduction is an overall average between funds and among dozens of risk classes is shown by the fact that some risk classes are seeing rates go up, while others are seeing rates go down. Hospitals, for example, will see a five percent increase in their risk class, and certain retail stores a nine percent increase. 

See the base rates by fund and history here.