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Proposed 16 Percent Workers’ Comp Increase Highlights Need for Reform

AGC reasserted its call for reform of the state’s workers’ compensation insurance system in light of the huge premium increase announced by the Department of Labor and Industries.

“Economists are saying that 2011 could be the year that the state’s construction economy turns around” said AGC Executive Vice President David D’Hondt. “The fledgling recovery however could be squelched by increased costs such as these. The 16 percent increase for workers’ comp is on top of a 42 percent increase in unemployment insurance premiums.”

On Nov. 8 Labor and Industries announced a 12 percent average increase in workers’ compensation insurance premiums for 2011 with a 16 percent increase for the construction industry.

AGC says systemic reforms are needed and called on the Legislature to enact changes that allow employers employees and L&I to use final settlement agreements to close claims; clarify the definition of occupational disease; expand managed care networks for injured workers; and simplify the process for calculating worker benefits by using a flat rate and four-quarter income averaging.

“No doubt the Legislature will be on the spot next year to balance the budget without raising taxes” said D’Hondt. “The construction industry has been pursuing good ideas that don’t merely cut programs but reform the system in ways that promote the growth of businesses and the tax revenues they provide. Hopefully the 2011 Legislature with its dozens of new Legislators will be willing to take a fresh look.”

The proposed increases vary considerably by construction rate class: from 4 percent for site superintendent to 25 percent for masonry construction. AGC has produced a table that displays L&I’s proposed 2011 Industrial Insurance rates for the construction industry showing the 2011 base rate per classification along with the differences from 2010 rates both in hourly and yearly calculations. Information in red expresses cost increases and black in cost decreases. To see it click Workers’ Comp Table.

Individual firms’ rates will differ as the rate is impacted by both the risk class and by a firm’s EMR. If your firm would like assistance determining your proposed EMR contact AGC’s Group Retro office at 888-227-3876 or email Lauren Gubbe.

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