Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 51.16.035 and 51.04.020(1).

Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: Labor and Industries is required by law to establish and maintain a workers' compensation classification plan and set premium rates in accordance with recognized principles of insurance. By law the plan is to recognize the hazardous nature of each industry and assign insurance rates commensurate with the hazard of each industry. Labor and Industries is required to adjust these rates annually or more frequently if needed to ensure solvency of the insurance trust funds.

Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: None.

Process for Developing New Rule: Labor and Industries bases insurance rates for each industry on the loss and reporting information supplied by employers. Industries whose employers have had an improved loss record from the previous evaluation period will as a general rule experience a reduction in rates while industries whose employers experienced an increase in losses will generally see their insurance rates increase. Labor and Industries will also evaluate the need for an overall rate adjustment for all industries.

Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication. Labor and Industries has scheduled two formal public hearings. The first hearing is to be held at the Spokane Labor and Industries Office on November 2, 1998, at 10 a.m. The second hearing is to be held at the Labor and Industries Central Office Building in Tumwater, Washington on November 6, 1998, at 10 a.m. Inquires can be directed to Ken Woehl or Sandra Chakones of the Classification Services section at (360) 902-4776.

June 24, 1998

Gary Moore

Director