For immediate release: October 2, 2001
Contact: Steve Corson, 503-947-7868 Steven.J.Corson@state.or.us
OREGON WORKERS' COMPENSATION COSTS TO REMAIN ESSENTIALLY FLAT
(Salem) State officials today announced two rates and a recommendation for
a third that together will determine what Oregon employers pay for workers'
compensation insurance and to support workers' compensation and workplace safety
programs in calendar year 2002.
workers' compensation "pure" premium rate the average rate
employers pay to their insurance company
for workers' compensation coverage will decline by 0.1 percent for
2002. Albeit only a small decrease from 2001, this marks twelve consecutive
years of rate reductions in Oregon. The cumulative cut in
workers' compensation insurance costs since 1990 totals 57.4 percent. The
pure premium rate is the base premium
reflecting the actual cost of workplace injury and illness claims, before
insurer administrative expenses and
profit are added into rates. Although the state sets the pure premium rate,
premiums do not fund state programs or services.
The 0.1 percent reduction in the pure premium represents
an average cut across all types of businesses. Rates for specific businesses
and industry groups may be higher
or lower depending on group and individual claims experience. It is important
to note that the average rate will
decrease despite the state supreme court's recent ruling in Smothers
vs. Gresham Transfer,
Inc. The Smothers decision allows
injured workers to sue their employers outside of the workers' compensation system under some circumstances, thus
creating upward pressure on premium rates. That upward
pressure, however, has been counteracted so far by continued positive experience
in the rest of the system.
The Workers' Benefit Fund assessment rate for 2002 will remain at 3.6 cents.
This applies to each hour or partial
hour worked by each paid employee covered by an employer's workers' compensation
policy. This continues a rate decrease
put into effect last year. Formerly known as the "cents-per-hour" assessment,
the assessment supports certain direct
benefits to injured workers. Employers pay at least one-half the assessment and deduct no more than one-half from
their employees' wages. Most employers must then submit
the complete amount to the state on a quarterly basis. Employers who fail
to provide workers' compensation
coverage required by law are still subject to the assessment, which is collected
retroactively along with other penalties.
- State analysts have recommended that the workers' compensation premium assessment
rate increase slightly to 8.0 percent
for 2002. This is a 0.7 percentage point rise from 2001. Employers pay the assessment based on the total premium charged to
them by their insurer. The premium assessment is dedicated
to the state's administration of the workers' compensation system, plus workplace
safety and health programs. Insurers
collect the assessment and then transfer it to the state. This increase was discussed with the 2001 Legislature as part of a
budget package that included program cuts to avoid a larger
increase. Self-insured employers will pay 8.2 percent. The Department of Consumer
& Business Services will hold a
hearing to invite public comment on the recommendation on October 11 at 3:00
p.m. in basement conference room "B"
of the Labor and Industries Building, 350 Winter Street NE in Salem. The department's director will consider any comments
submitted before making a final rate decision.
effect of these rates is that, on average, employers' workers' compensation
costs for the year will essentially
remain flat. Cumulative premium savings to employers since 1990, however,
amount to approximately $6.3 billion.
Oregon's national ranking in workers' compensation costs moved from sixth most
expensive in the nation in 1986 to 34th by 2000. At the same time, maximum benefits
for permanently disabled workers in Oregon have been increased to a compensation
level close to the national median.
Workplace injury and illness rates in Oregon have declined by over 43 percent
in the private sector and nearly 36 percent in the public sector since 1988.
This includes all work-related injuries and illnesses recordable under OSHA
standards, regardless of whether they later resulted in accepted claims for
workers' compensation benefits. During the same period, the total number of
employees subject to workers' compensation coverage has increased substantially.
The new rates
for pure premiums, the Workers' Benefit Fund assessment, and the premium
assessment will go into effect
January 1, 2002. A notice describing the rates will be mailed before the end
of October to employers who are required
to carry workers' compensation insurance.