BILL REQ. #:  S-0432.2 

Read first time 01/19/11.   Referred to Committee on Labor, Commerce & Consumer Protection.

     AN ACT Relating to adjusting workers' compensation premium rates; amending RCW 51.16.035; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The legislature recognizes the high level of authority and the corresponding high level of responsibility that the department of labor and industries has in setting workers' compensation rates for employers. By setting rates for employers with virtually no legislative oversight, the department's taxing authority is significant and its impact is broad. The legislature finds that this taxing power necessarily comes with a responsibility to the public not only to set rates that are fair and sustainable, but also to provide a transparent process that allows adequate time for employers to review information about the funds and plan for potential rate changes. The 2011 rates were not set in an adequately transparent and deliberative process, and the legislature finds it necessary to set standards for the minimum level of information to be provided and the time frame for doing so in order to afford sufficient notice to employers about potential tax increases.

Sec. 2   RCW 51.16.035 and 2005 c 410 s 1 are each amended to read as follows:
     (1) The department shall classify all occupations or industries in accordance with their degree of hazard and fix therefor basic rates of premium which shall be:
     (a) The lowest necessary to maintain actuarial solvency of the accident and medical aid funds in accordance with recognized insurance principles; and
     (b) Designed to attempt to limit fluctuations in premium rates.
     (2) The department shall formulate and adopt rules governing the method of premium calculation and collection and providing for a rating system consistent with recognized principles of workers' compensation insurance which shall be designed to stimulate and encourage accident prevention and to facilitate collection. The department must annually adjust rates to become effective on January 1 of each year. In order to provide enough time for public notice and input, the department must annually provide the workers' compensation advisory committee with an analysis of the status and health of the funds and indicated premium rates for the following calendar year by the end of September. The department may ((annually, or)) also at such other times as it deems necessary to achieve the objectives under this section, readjust rates in accordance with the rating system to become effective on such dates as the department may designate.
     (3)(a) After the first report is issued by the state auditor under RCW 51.44.115, the workers' compensation advisory committee shall review the report and, as the committee deems appropriate, may make recommendations to the department concerning:
     (i) The level or levels of a contingency reserve that are appropriate to maintain actuarial solvency of the accident and medical aid funds, limit premium rate fluctuations, and account for economic conditions; and
     (ii) When surplus funds exist in the trust funds, the circumstances under which the department should give premium dividends, or similar measures, or temporarily reduce rates below the rates fixed under subsection (1) of this section, including any recommendations regarding notifications that should be given before taking the action.
     (b) Following subsequent reports issued by the state auditor under RCW 51.44.115, the workers' compensation advisory committee may, as it deems appropriate, update its recommendations to the department on the matters covered under (a) of this subsection.
     (4) In providing a retrospective rating plan under RCW 51.18.010, the department may consider each individual retrospective rating group as a single employing entity for purposes of dividends or premium discounts.