Workers’ Comp Premium Rate Directly Tied to Injuries/Claims

By Robert T. Nelson, Labor and Industries Public Affairs

Last year, as the Department of Labor and Industries (L&I) prepared to hold rate hearings around the state, we put together some examples of the different premium rates employers and workers paid within various industries and risk classes. One of the examples was in the residential wood-framing industry, and the disparity was stark. Within that trade, contractors paid as little as 85 cents an hour and as much as $5.25. As you can imagine, employers paying the lesser amount tended to view the cost of industrial insurance differently than those paying at the upper end.

The same disparity exists in the logging industry. This year, companies reporting in Risk Class 5001 are paying between $4.19 and $16.58 an hour for workers’ compensation insurance. The higher of those two rates works out to be over $33,000 a year in premiums for each full-time worker the company employs.

That’s four times what the company with the low rate pays. Employers aren’t the only ones who suffer from the higher rate. Washington is the only state in the nation where workers pay into the industrial insurance system, so about a quarter of the premium can be passed on to them. At the company with the lowest rate, workers contribute 66 cents an hour to their insurance coverage. Workers at the company paying the highest rate pay $2.57 an hour.

There’s no denying the dangers of working in the logging industry. It was one of the original industries insured when Washington’s workers’ compensation system was established in 1911, and logging remains hazardous work. Injuries often are life altering, permanent and expensive to treat, which is why the Logging Operations risk class has the highest rates in our system.

But, as is illustrated above, that expense is borne most heavily by companies with poor safety records and multiple expensive injury claims that involve wage-replacement benefits, retraining and pensions when a logger is injured so severely he or she will never work again. Such injuries can be prevented, providing the employer understands the connection between safety and the cost of industrial insurance and takes appropriate precautions.

For example, a claim stays on an employer’s record for about three years. No matter how serious or costly the injury, a claim only impacts an employer’s premiums for that period of time. Emphasize safety and reduce injuries, and a bad experience factor can turn around rather quickly. A few years ago, one of L&I’s safety consultants was at a logging site and noticed several workers not wearing eye protection. The consultant asked the foreman why safety glasses weren’t being worn and the supervisor replied that it was hard to get workers to wear them because they fogged up and were uncomfortable. "What would you do if that worker stole one of your chain saws?" asked the L&I consultant. "I’d fire him," came the reply. "Well, if that worker loses an eye, it’s going to cost you a whole lot more than a chain saw," responded the consultant.

By the way, the Permanent Partial Disability award for a lost eye is $37,087.18. And that amount doesn’t include the medical and time-loss benefits that would have been paid during the worker’s recovery. There was a time, not too long ago, when the timber industry averaged 300 to 500 eye injuries a year. That number declined with the advent of safety glasses that don’t fog up.

Fatalities, too, have gone down as the industry has gone through the cycle of logging second-growth trees on flatter ground. The most common injury in logging is "Struck bys," as in workers being struck by trees, limbs, snags, equipment, machinery and whatever else happens to be tumbling by. Two years ago, Region 4 in Southwest Washington, where most of the state’s logging occurs, began a safety consultation program with landowners and contractors.

The program focuses on avoiding "Struck bys." Since the program began, the number of "Struck bys" has dropped by 81 percent, and that decline in injuries has resulted in lower insurance premiums for the companies that focused on safety. The consultations are free and confidential. Hazards found will not be cited as long as the employer agrees to correct them. If your company hasn’t had a safety consultation, you can request one by calling Marcia Holt at (360) 902-5472 or go online at: http://www.lni.wa.gov/Safety/Topics/AtoZ/Logging/default.asp  Logging is an ever-changing environment. Stuff is moving all the time. Oftentimes, a logger is working on a steep slope, and that is especially hazardous when the logger is inexperienced. And the dangers will increase as the industry completes its logging of second-growth timber on relatively flat land and moves to higher ground.

The cycle of logging continues as trees mature and are cut. But the cycle of devastating, life-altering injuries doesn’t have to go on. Please do yourself and your workers a favor and take advantage of the expert safety consultations L&I has to offer. Your workers and their families, and your company’s bottom line, will benefit.

TW

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