Sept. 17--The state's Labor and Industries Department proposed Monday to keep the average workers compensation insurance rate unchanged for the coming year, citing unexpectedly large cost savings from reforms enacted in 2011.

The department, which oversees Washington's state-run workers compensation system, said those reforms are now projected to save $1.5 billion over four years, $300 million more than estimated earlier.

Officials at L&I outlined options in the summer for a range of potential rate increases that would begin to replenish the system's surplus or cushion for unexpected losses. Increases of 7.8 percent to 28.6 percent in the average rate were discussed.

But in a statement Monday the department said holding rates flat would still yield $82 million that could be added to the surplus by the end of 2013.

"Had the Governor and the Legislature not adopted the 2011 reforms, I wouldn't be making this proposal today," L&I Director Judy Schurke said in the statement. "In fact, without those reforms, we would be facing a rate increase. Instead, we're able to keep rates down for Washington's businesses and workers."

The department said its projections show that without those savings, the system would have required a 4 percent increase to break even in 2013. As is, it could reduce rates by 4.2 percent and break even, but instead it proposes to hold rates steady and use the extra premiums to bolster the system's reserves.

Those reserves, said Schurke, "are critically low by industry standards due to increased liabilities, investment losses and drawing down the reserves to hold down rates during the recession."

Officials projected this summer that returning the surplus to somewhere between 9 percent and 19 percent of liabilities would require between $470 million and $1.75 billion in new insurance premiums.

Schurke's statement said other factors also contributed to the lower costs projected for 2013:

--Fewer claims in industries with high injury rates, such as construction, mean long-term disabilities;

--The number of long-term disability claims per 100 workers has gone down by 6.2 percent;

--Medical costs for workers comp claims have grown less than 4 percent during the past five quarters.

--L&I says it is resolving claims more quickly.

The department will announce its final rates for 2013 in December, after a series of six hearings across the state. Locally, a hearing is scheduled on Oct. 23 in Tukwila.

Material from Seattle Times archives is included in this report.

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