2011 Workers’ Compensation Costs Questions and Answers
The Department of Consumer and Business Services (DCBS) recently announced workers’ compensation costs for 2011. On average, costs for employers will be flat. The changes include:
A 1.8 percent decrease in the workers’ compensation “pure” premium rate for 2011. The reduction marks the fifth straight year for a rate decrease and the 21st consecutive year with no rate increase.
A proposed 1.8 percentage point increase in the workers’ compensation premium assessment, from
percent in 2010, to 6.4 percent in 2011. (Self-insured employers and self-insured employer groups pay an additional 0.2 percent into a reserve to pay claims in the event of a bankruptcy.) The assessment rate has decreased four times since 2002.
No change in the Workers’ Benefit Assessment. It will remain at 2.8 cents per hour.
What is the pure premium rate?
The pure premium rate is the base rate employers pay to their insurance company for workers’ compensation coverage. It reflects the actual cost of workplace injury and illness claims before insurance carriers’ administrative expenses and profit are added. The 1.8 percent reduction represents an average across all types of businesses. Rates for specific businesses and industry groups may be higher or lower depending on group and individual claim experience.
How does the department calculate the rate each year?
The department sets the pure premium rate based on a recommendation from the National Council on Compensation Insurance Inc. (NCCI). Based in Boca Raton, Fla., NCCI manages the nation’s largest database of workers’ compensation insurance information and prepares workers’ compensation insurance rate recommendations for many states.
When making its rate recommendations, NCCI looks at various trends in Oregon claims experience and benefits to forecast “loss costs” – or the estimated cost of injury and illness claims.
Why are pure premium rates going down?
Improvements in workplace safety have resulted in decreasing frequency and severity of claims. Workplace injury and illness rates in the state have declined 24 percent since 2004 and more than 58 percent since the late 1980s.
In addition, DCBS has worked with management and labor to reduce claims costs by helping workers return to work faster, controlling medical costs, and several other initiatives. The following are some of the recent measures that have contributed to reduced workers’ compensation costs:
Employers continue to use the department’s return-to-work programs, which help injured workers return to work faster with good wages. Use of the “Employer at Injury Program” has grown significantly since the department simplified requirements and processes.