The Washington state Department of Labor & Industries is proposing a 3.1% overall average rate increase for workers’ compensation insurance for 2022. 

If approved, the increase would be the state’s first rate hike in five years.

On Sept. 21, L&I said it was proposing the increase due to cost-of-living adjustments for pensions. In July, the department applied a 10.1% cost-of-living increase to time-loss, pension, and loss-of-earning power benefits. L&I says the increase to those benefits was triggered by an increase in the state’s average wage.

In a release detailing the proposed increase, L&I says the increase will cost employers and workers an average of $38 per employee each year.

The department notes that the overall average rate increase means some employers will see a decrease in their insurance rate, while others will see larger increases. If the proposed changes are adopted, 230 of the state’s 325 risk classes will see higher base rates in 2022.

Workers would pay an average of 27% of the premium, which L&I says is similar to the percentage paid this year. 

Workers’ compensation is funded by employers and workers, who pay into a compensation system to help cover wage and disability benefits for injured workers, as well as health care costs for injuries and illnesses.

Next year, the department says it will continue using contingency reserves to cover gaps between premiums and end costs in order to avoid raising rates further. L&I began using contingency reserves for that purpose this year in order to avoid burdening businesses impacted by the COVID-19 pandemic.