Workers’ Comp Rates Cut 10 Percent

Washington business owners just won the lottery.

For the first time in eight years, the state Department of Labor and Industries said Wednesday that it plans to cut workers’ compensation insurance rates.

Rates vary by industry but will drop an average of 10 percent, saving private industry $100 million a year.

The surprising move means most private employers and their employees will pay less in 1996 to the state insurance fund for accident and medical coverage.

Public hearings are required to enact the proposed cuts, but officials expect little opposition.

“It’s money in your pocket,” said Michael Otis, benefits specialist for FRP Group Benefits Inc. in Spokane. “This is tremendous.”

Announcing the rate cut from Layrite Products Co. on East Trent, the department’s regional administrator, Craig Hinnenkamp, said the change is a result of a decline in insurance claims, a halt to health care inflation and the buildup of reserves in the Washington State Fund, from which workers’ compensation claims are paid.

The cuts will provide badly needed relief to manufacturers and to the depressed forest products industry, Hinnenkamp said.

Loggers, sawmills, cabinetmakers and other employers classified by the department as forest products businesses could see workers’ compensation rates drop 14 percent, for a potential annual savings of $560 for every full-time employee. A company owner could save $2,053 a year for every logger employed; the logger could take home an extra $900 for his or her share of medical premiums.

Layrite President Robert Bakie said the rate cut could save his concrete block company $60,000 a year. For Layrite, a company with 100 employees and dreams of upgrading operations, that’s a significant reduction in fixed costs.

“That’s a lot of dollars,” Bakie said, standing against a stack of red garden-wall blocks. “It’s good to see the state make an effort to help business and industry.”

Department officials said that of the 300 different categories of businesses, 288 will get rate reductions. Among those who will pay more are electric power plants, funeral directors, port districts, dancers, hydroplane drivers and blacksmiths.

The amount of savings realized by each company will depend on the type of business and its insurance rating, said Mary Pat Frederick, program manager for the department in Olympia. Some high-risk industries can realize greater savings, but if they have a history of accidents and claims, they may not receive a reduction.

The proposed rate cut would reduce annual premiums paid to the department from $800 million to $700 million, Frederick said. The agency paid $735 million in workers’ compensation claims in fiscal 1995.

Four public hearings on the proposed rate cut are scheduled, including Oct. 3 at the Sheraton-Spokane Hotel. The new rates would take effect Jan. 1, 1996.

, DataTimes ILLUSTRATION: Graphic: Rate reduction