From:
Risk & Insurance
November 5, 2008

Workers' Compensation Rates to Drop by Nearly 6 Percent, Officials Say

Employers in Oregon will pay nearly 6 percent less on average for workers' compensation coverage in 2009, according to the state's Department of Consumer and Business Services.

Officials said the reduction in the workers' comp pure premium rate marks the third straight year for a decrease and the 19th consecutive year with no rate increase. Since 1991, Oregon's workers' comp costs have declined nearly 62 percent, saving employers $16.4 billion, while improving benefits and services for injured workers.

"This rate reduction continues Oregon's unprecedented success story in workers' compensation," said Gov. Ted Kulongoski. "Not only have we been able to keep costs low for employers, but we have improved worker benefits and made workplaces safer."

Kulongoski said the successes in Oregon's workers' comp system were recognized earlier this year in a national study by the Workers Compensation Research Institute. The study, Lessons from the Oregon Workers' Compensation System, highlighted several lessons other states can learn from Oregon, including cooperation between management and labor; accurate and timely benefits for injured workers; reduced litigation over benefits; and return-to-work programs that help injured workers get back to the job faster.

The pure premium rate is the base rate employers pay their insurance company for workers' comp coverage. On average, officials said employers can expect a 5.9 percent decrease in pure premium in 2009. However, some employers will see rates go up, and others may see no change. Specific cost changes will vary from business to business, depending on the employer's industry, claims experience, workforce and other factors.

Officials credit safety with falling injury claims. The department sets the pure premium rate based on a recommendation from the National Council on Compensation Insurance. To make the recommendation, the council examines various trends in claims experience and benefits to forecast loss costs, or the estimated cost of injury and illness claims in Oregon. NCCI forecast a 5.9 percent decrease in loss costs because claims frequency and costs per claim continue to decline in the state, while medical costs are increasing, but at a slower rate.

"Employers and workers in Oregon have worked hard to make their workplaces safer, and it has resulted in fewer, less severe injuries," said Cory Streisinger, director of the Oregon Department of Consumer and Business Services.

Streisinger added that workplace injury and illness rates in the state have declined more than 10 percent since 2004, and more than 50 percent since the late 1980s.

Medical costs, officials said, also constitute a large piece of the pure premium rate. Streisinger said the department has taken several steps to reduce medical costs in workers' comp, such as lowering pharmacy fees, encouraging the use of generic drugs, and working with the Workers' Compensation Medical Advisory Committee to screen the use of new and experimental medical procedures.

State touts past reforms. While low premium rates have provided significant savings to employers, officials said Oregon has continued to make several changes to its workers' comp system that benefit injured workers. For example, Streisinger said:

• Benefits for permanent disability have increased between 600 percent and 800 percent since the late 1980s, depending on the type of injury. They now go up automatically as statewide wages increase.

• Oregon's wage replacement benefits are now among the highest nationally.

• The rate at which workers' claims are denied has held steady in the past 15 years and has declined slightly since 2002.

• Workers have more rights in the independent medical examination process, with the ability to contest the examination location, bring in an observer during the examination, and file complaints.

• Workers are receiving medical benefits more quickly. The department's Workers' Compensation Division has reduced the average time it takes to resolve medical disputes 57 percent since 2005.

"We will continue to work with the Management-Labor Advisory Committee to further improve benefits to workers while keeping costs low for employers," Streisinger said.

The committee, Streisinger said, is developing recommendations to improve workers' comp death benefits and plans to submit a legislative proposal to the 2009 Legislature.

The department also announced that two workers' comp fees will remain unchanged next year. The workers' comp premium assessment, which pays for the administration of workers' comp and workplace safety programs, is proposed to remain at 4.6 percent in 2009 (4.8 percent for self-insured employers and employer groups). The Workers' Benefit Fund assessment, which pays for special benefits for injured workers and their employers, will remain at 2.8 cents per hour worked in 2009. Employers and workers each pay half of the Workers' Benefit Fund assessment. Neither the premium assessment nor the Workers' Benefit Fund assessment have increased in the past seven years.

For more information, visit the Department of Consumer and Business Services Web site at www.dcbs.oregon.gov.