Industrial insurance rates

AN ACT Relating to promoting transparency in certain industrial 1
insurance rate increases; amending RCW 51.16.035; and creating a new 2
section. 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
NEW SECTION. Sec. 1. (1) The legislature finds that:5
(a) Open and transparent governance is an absolute necessity for 6
any state program. With it, the people the government serves are 7
fully informed of its successes and can appropriately address its 8
shortfalls. In its absence, failures continue onward unchecked. At a 9
minimum, the lack of transparent decision making shakes the public's 10
confidence in the state; 11
(b) This axiom is strained during the premium rate-setting 12
process for the state's workers' compensation program. It has become 13
common practice to artificially limit the premium rate change for 14
certain risk classes below what it should be based on actuarial 15
principles. Meanwhile, the rate classes limited, their actual 16
premium, and how the limited rate is subsidized across other risk 17
classes is not presented in a clear and concise manner;18
(c) This practice leads to increased use of contingency reserves 19
to further limit proposed rates. The department of labor and 20
industries has utilized contingency reserves to cap the proposed 21
H-2634.1
HOUSE BILL 2188
State of Washington 69th Legislature 2026 Regular Session
By Representatives Schmidt, Dufault, Abbarno, McEntire, Jacobsen,
Ybarra, Barnard, Graham, and Couture
Prefiled 12/23/25. Read first time 01/12/26. Referred to Committee
on Labor & Workplace Standards.
p. 1 HB 2188
premium rate for three consecutive years. In the latest rate setting 1
this is an 8.1 percent reduction from the "break-even" rate, leading 2
to a $240,000,000 reduction in contingency reserves. Use of reserves 3
to limit the annual rate increase, while laudable in the short term, 4
is not a sustainable option; 5
(d) This practice clouds the workers' compensation program's true 6
costs, leaves the people uninformed, and makes the legislature slow 7
to the draw on potential reforms. 8
(2) Therefore, it is the intent of the legislature to promote 9
open and transparent governance, and to ensure the continued health 10
of the state's workers' compensation program, through the proper 11
reporting of annually proposed premium rates. 12
Sec. 2. RCW 51.16.035 and 2005 c 410 s 1 are each amended to 13
read as follows: 14
(1) The department shall classify all occupations or industries 15
in accordance with their degree of hazard and fix therefor basic 16
rates of premium which shall be: 17
(a) The lowest necessary to maintain actuarial solvency of the 18
accident and medical aid funds in accordance with recognized 19
insurance principles; and 20
(b) Designed to attempt to limit fluctuations in premium rates.21
(2) The department shall formulate and adopt rules governing the 22
method of premium calculation and collection and providing for a 23
rating system consistent with recognized principles of workers' 24
compensation insurance which shall be designed to stimulate and 25
encourage accident prevention and to facilitate collection. The 26
department may annually, or at such other times as it deems necessary 27
to achieve the objectives under this section, readjust rates in 28
accordance with the rating system to become effective on such dates 29
as the department may designate. 30
(3)(a) After the first report is issued by the state auditor 31
under RCW 51.44.115, the workers' compensation advisory committee 32
shall review the report and, as the committee deems appropriate, may 33
make recommendations to the department concerning:34
(i) The level or levels of a contingency reserve that are 35
appropriate to maintain actuarial solvency of the accident and 36
medical aid funds, limit premium rate fluctuations, and account for 37
economic conditions; and 38
p. 2 HB 2188
(ii) When surplus funds exist in the trust funds, the 1
circumstances under which the department should give premium 2
dividends, or similar measures, or temporarily reduce rates below the 3
rates fixed under subsection (1) of this section, including any 4
recommendations regarding notifications that should be given before 5
taking the action. 6
(b) Following subsequent reports issued by the state auditor 7
under RCW 51.44.115, the workers' compensation advisory committee 8
may, as it deems appropriate, update its recommendations to the 9
department on the matters covered under (a) of this subsection.10
(4) In providing a retrospective rating plan under RCW 51.18.010, 11
the department may consider each individual retrospective rating 12
group as a single employing entity for purposes of dividends or 13
premium discounts. 14
(5) The department shall publish the actuarially indicated rate 15
for each risk classification as part of its proposed premium rates 16
for the upcoming year.17
(6)(a) If the director limits the maximum premium rate increase 18
for any risk classification below the level indicated by applying 19
generally accepted actuarial principles to the risk class, the 20
department must publish information about the limitation when it 21
proposes its premium rates for the upcoming year. Such information 22
must include, but is not limited to:23
(i) The rate classifications limited by the director and the 24
respective proposed rate;25
(ii) What the rate for the class would have been according to 26
generally accepted actuarial principles had a maximum increase 27
limitation not been set by the director;28
(iii) The premium rate increase imposed upon other risk classes 29
as a result of the limitation.30
(b) The department shall publish the information described in 31
this subsection (6) on its website and as part of its proposed 32
premium rates for the upcoming year.33
(c) The department shall submit the information described in this 34
subsection (6) to the appropriate committees of the legislature and 35
to the workers' compensation advisory committee.36
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