SENATE BILL REPORT

SB 6738

BYSenators McMullen, Bailey, Anderson, Metcalf, Owen and Lee

Authorizing establishment of reduced industrial insurance premium rate for distressed traditional industries.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):February 5, 1988

Majority Report:     That Substitute Senate Bill No. 6738 be substituted therefor, and the substitute bill do pass.

     Signed by Senators Anderson, Vice Chairman; Conner, McMullen, Smitherman, Warnke, Williams.

Senate Staff:Dave Cheal (786-7576)

                February 8, 1988

AS REPORTED BY COMMITTEE ON ECONOMIC DEVELOPMENT & LABOR, FEBRUARY 5, 1988

BACKGROUND:

Employers in the shake and shingle industry pay one of the highest industrial insurance premiums of any classification within the state.  It is approximately $5 per hour per covered employee.  The cause of the high rate is a combination of frequent and severe claims and failure of many employers within the industry to pay any premiums or to report all the hours they are working.  Without some kind of incentive the situation is not likely to improve.  The survival of employers who are in compliance is threatened, and the chances that noncompliance will increase are very high.

Foreign competition is significant, both in the form of products which are manufactured outside the state and from highly mechanized, well-capitalized mills that are established here by foreign owners.  This high degree of mechanization leads to a favorable industrial insurance premium in some cases.

SUMMARY:

The supervisor of industrial insurance is allowed to identify distressed traditional industries and provide them with a rate rollback.  To do so the supervisor must make a finding that the industry in question has experienced at least a 50 percent decrease in reportable hours during the last five year period, experiences substantial foreign competition, the current premium level is among the highest of all classifications and constitutes a threat to the industry, and the industry is a traditional industry within the state.  Having made these findings, the supervisor may set the basic rate for that industry at 50 percent of the current rate for a three year period.  At the end of the three year period the rate is returned to an acturially sound level but may not be raised more than 25 percent during any one year.

EFFECT OF PROPOSED SUBSTITUTE:

A possible extension of the roll back period is provided if reporting compliance increases by 50 percent and half of known employers in the industry utilize loss control or WISHA voluntary services during the three year period.

Appropriation:  none

Revenue:   none

Fiscal Note:    requested February 3, 1988

Effective Date:The bill contains an emergency clause and takes effect immediately.

Senate Committee - Testified:   Jack Moffet, Hy-Ha Cedar Products (for); Mike Matson, Skagit Valley Red Cedar Shake Association (for); Brett Buckley, L&I (against)