AGC Opposes Workers' Comp Premium Increases for 2012

SEATTLE, Sept. 15, 2011 /PRNewswire-USNewswire/ -- Associated General Contractors (AGC) of Washington calls on the Department of Labor and Industries to keep 2012 workers' compensation premiums at their current levels.

AGC and partner organizations worked hard to enact workers' comp reforms in the last legislative session.  That labor is now bearing fruit: L&I announced that for 2012 premiums the break-even rate (premiums equal expected costs) would be a 0.3 percent decrease.  Without the reforms, the break-even rate next year would have been an 8.1 percent increase.

However, just because the break-even point suggests that premiums could remain level, that does not mean that there would not be an increase, as L&I proposed rate increases between five and eight percent for 2012.

"The construction industry continues to be hit hard by the economic downturn," said AGC Government Affairs Director Rick Slunaker. "Construction employment has decreased 35 percent since 2007, and a significant rebound is not expected anytime soon.  We applaud the efforts of the Governor and L&I Director Schurke to secure the important workers' comp reforms, and they are working.  Keeping next year's premiums at the current level would allow L&I to meet expenses, and still have funds in reserve. Holding the line on premiums would help businesses add, not subtract jobs."

Actuaries recently told L&I's Workers' Comp Advisory Committee (WCAC) that Washington State's system has reserves, but they are low by industry standards. L&I proposed the rate increases to increase reserves.

Slunaker said that AGC understands the value of enhancing reserves over time, but believes now is not the time to increase premiums.  "Because of the reforms, the actuaries indicate that a level premium rate would not further draw down reserves in 2012," Slunaker said.  "Given that fact, plus the down economy, the prudent thing is to hold the line on premiums and the reserves, and let the reforms continue to work their way through the system."

Slunaker added that employees, and not just employers, would benefit from level premiums, as employees pay about 25 percent of workers' comp premiums. "Those in the Building and Construction trades have been hit hardest by recent increases, including 16 percent in 2011," he said.  "Holding the line on premiums means that people who are already working significantly less hours can keep more of their hard-earned money."

SOURCE Associated General Contractors of Washington