Workers Comp Rate Proposal
Oregon proposes drop in workers’ comp rates
By Kathleen McLaughlinThe Bulletin Published Sep 23, 2016 at 12:01AM / Updated Sep 23, 2016 at 08:41AM
Workers’ compensation insurance rates would drop for the fourth straight year in 2017 under a proposal by the Oregon Department of Consumer and Business Services.
The average rate, before insurers’ profits and other expenses, would decline by 7.2 percent, from $1.10 per $100 of payroll to $1.02 per $100, according to a department announcement.
The state-established rate is before insurance companies add their profits, marketing and administrative expenses. Even after adding those expenses, the total average cost to employers would drop from $1.38 per $100 of payroll to $1.28, according to the agency.
Oregon has some of the lowest workers’ comp rates in the country but has kept benefits level since the 1990s, according to the department. Seven other states and the District of Columbia had lower average rates than Oregon in 2014.
Of course, any one company could see premiums lower or higher than the average because of its individual track record, industry or location.
The major component of the proposed workers’ comp rate is called the pure premium. The Department of Consumer and Business Services sets the pure premium after receiving a recommendation from the Florida-based National Council on Compensation Insurance Inc., which analyzes industry trends and prepares rate recommendations a majority of states.
The pure premium will take effect Jan. 1, and employers will see it reflected in their rates as their policies renew in 2017. While the state decides the pure premium rate, two smaller components of the state-established rate are subject to upcoming public hearings.
Department of Consumer and Business Services Director Patrick Allen said he’s heard no negative feedback from employers, or insurers, who could lose money if the state’s rates are too low.
“We have been circulating all of these numbers among all of our stakeholders and have been getting positive feedback,” he said. “These are good numbers.”
A steady decline in average medical care costs contributed to the decline in pure premium, Allen said. Similar to the Medicare system, the state sets the price paid to medical providers for treatment under workers compensation claims, and Oregon has been holding those prices down, Allen said. It helps that overall injury rates and the severity of injuries has also declined, he said.
“It’s been hard work by employers and insurers and good enforcement work by the folks at OSHA,” he said, referring to the state occupational safety and health agency. “Employers in Oregon really understand how safety impacts their bottom line.”
Also contributing to the decline in premium is stable wage-replacement costs, as Oregon has focused on returning people to work as soon as possible after an injury, Allen said.
The state-established rates also include an assessment that covers Department of Consumer and Business Services administrative costs. The department is proposing to raise the assessment, so it would account for 7.5 cents of the $1.02, up from 7.4 cents. It says the increase would cover investments in worker protection and other programs. A public hearing on the assessment is set for 8:30 a.m. Oct. 17 at the Labor and Industries Building, Room 260, in Salem.
A third component of the state-established rate is the payroll assessment, which supports the Workers’ Benefit Fund for certain injured workers and their families. The state is proposing to lower that assessment from 11.4 cents to 9.3 cents. DCBS says it wants to lower the Workers’ Benefit Fund assessment, flat since 2013, because of the expanding economy and lower program costs. A hearing on the Workers’ Benefit assessment will be today at 3 p.m. in the Labor and Industries Building.
— Reporter: 541-617-7860,
