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Salem, OR—Oregon employers will see a key portion of their workers' compensation costs drop by an average of 14 percent in 2018, the Department of Consumer and Business Services (DCBS) announced today. This marks the fifth year in a row that businesses will experience an average decrease in the “pure premium.” Altogether, the rate has declined by an average of 33 percent since 2013.

Next year's average decrease in pure premium – the portion of the premium employers pay insurers to cover claims costs for job-related injuries and deaths – is part of a package of rates designed to maintain workplace safety and health programs while preserving historically low costs.

The other rate proposals include:
• An increase in the premium assessment, which funds state costs of running workers' compensation and workplace safety and health programs, from 6.8 percent to 7.4 percent. The increase is needed to support worker protection and related programs to keep pace with an expanding economy.
• No change in the payroll assessment, which supports the Workers' Benefit Fund. The fund pays for highly successful return-to-work and other special injured-worker programs. The assessment will remain unchanged at 2.8 cents per hour worked.

The combination of the changes in pure premium and assessment rates is a net reduction in costs for the average employer. The average employer would pay 90 cents per $100 of payroll for claims costs and assessments, down from $1.03 in 2017.

“Keeping workers' compensation costs low helps maintain a healthy business climate for Oregon employers,” said Jean Straight, DCBS acting director. “Oregon is unique in achieving these low costs while at the same time preserving strong worker protection programs and benefits for injured workers.”
The decrease in pure premium is based on a recommendation from the Florida-based National Council on Compensation Insurance Inc. (NCCI), which analyzes industry trends and prepares rate recommendations for the majority of states. Pure premium reflects only a portion of workers' compensation costs, but is the key factor behind annual cost changes. The decrease is an average, so an individual employer may see a larger or smaller decrease, no change, or even an increase depending on the employer's own industry, claims experience, and payroll. Also, pure premium does not take into account the varying expenses and profit of insurance companies.
The decrease in the pure premium is effective Jan. 1, 2018, but employers will see the changes when they renew their policies in 2018. The changes to the premium and payroll assessments are effective Jan. 1, 2018.


Workers' compensation pays injured workers for lost wages and medical care for job-related injuries. Declines in average medical care and wage replacement costs are the key factors continuing to drive down the pure premium.
Oregon's workers' compensation premium rates have ranked low nationally for many years. Oregon had the seventh least expensive rates in 2016, according to a biennial study conducted by DCBS. That was an improvement from Oregon's ranking as the ninth least expensive state the last time the study was done, in 2014.
The following chart summarizes all the changes: http://www.oregon.gov/DCBS/cost/Documents/wc-summa...

Workers' Compensation Cost Summary: Effective Jan. 1, 2018
What
Pays for Cost/Change Recent Rate History
Pure premium Medical claims and benefits for lost wages. Excludes insurer expenses and profit. Average 14.0 percent decrease from 2017.
• 2017: 6.6 percent decrease
• 2016: 5.3 percent decrease
• 2015: 5.3 percent decrease
• 2014: 7.6 percent decrease
Premium assessment*
State regulatory costs to administer workers'
compensation and
workplace safety programs.

Self-insured employers and self-insured employer groups pay an additional amount to fund reserves that ensure prompt payment of claims in the event of insolvencies. • 7.4 percent of premiums for insured employers, increase from 2017.

• 7.6 percent for self-insured employers, increase from 2017.

• 7.6 percent for public-sector self-insured groups, increase from 2017.

• 8.4 percent for private-sector self-insured employer groups, increase from 2017. The increase of 0.6 percentage points is needed to invest in workplace safety and related programs to keep pace with a growing economy. In 2017, the rate was increased by the same amount, to 6.8 percent, for the same reason.


Self-insured employers and self-insured employer groups also increase 0.6 percentage points.
Workers' Benefit Fund
(Payroll assessment) Special benefits for certain injured workers and their families, and return-to-work programs. 2.8 cents per hour worked, unchanged from 2017. Employers and employees split the cost. The rate had been 3.3 cents since 2013. The rate was lowered to 2.8 cents in 2017 and will remain unchanged for 2018.


*Public hearing set for Thursday, Sept. 21, at 3 p.m. at the Labor and Industries Building, Room B, in Salem.


Annual Oregon average pure premium rate changes and average changes by industry: http://www.oregon.gov/DCBS/cost/Documents/pure-pre...

More information about Oregon workers' compensation costs can be found at http://www.oregon.gov/DCBS/cost/Pages/index.aspx



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The Department of Consumer and Business Services is Oregon's largest business regulatory and consumer protection agency. For more information, visit http://www.dcbs.oregon.gov/.

For more information:
Aaron Corvin, 971-718-6973
Aaron.corvin@oregon.gov

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