SENATE BILL REPORT

SB 5667

BYSenators McMullen and Metcalf

Creating a special classification under industrial insurance for distressed industries.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):February 15, 1989

Senate Staff:David Cheal (786-7576)

AS OF FEBRUARY 14, 1989

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 reduction in injuries and 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 roll back.  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 the industry at 50 percent of the current rate for a three-year period.  The reduction may be extended for an additional two years if the same conditions exist which led to the initial determination, reporting compliance increases by 50 percent, and half of the known employers in the industry have utilized loss control services of the department and Washington Industrial Safety and Health Act voluntary services.

After the initial three-year period and the two-year extension, if granted, the rate is to be returned to an actuarially sound level, but may not be raised more than 25 percent during any one year.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested February 13, 1989

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