Measuring workers’ compensation costs

This week the Oregon Department of Consumer and Business Services released its workers’ compensation premium rate rankings for 2014. By this measure, Washington looks slightly better than in 2012, but still not good. Our premium rates rank 17th, compared to 13th in 2012, 26th in 2010, and 38th in 2008.

As Kris Tefft of the Washington Self-Insurers Association writes,

Oregon’s rate study is closely followed by the national workers’ comp industry, since for most states it is an accurate picture of where pure premium rates rank. Washington, a special snowflake in the workers’ comp world, is alone in charging premium by the hour rather than by payroll, and uses unique, rather than standard, industry classifications. A lot of assumptions and conversions have to be made to translate Washington’s system into something that can be compared plausibly countrywide. Further, as one of four monopoly states, Washington has a large self-insured community, covering about a third of the workforce, whose claim costs are not accounted for in the study.

We have written extensively about the reasons the Oregon study is not a good measure of Washington’s workers’ compensation system costs. Instead, benefit cost comparisons are more accurate. According to the National Academy of Social Insurance, Washington has the highest workers’ compensation benefits costs in the nation.