Oregon Workers’ Comp Costs Dropping for 8th Straight Year

September 9, 2020

Oregon employers on average will pay less for workers’ compensation coverage in 2021, the Oregon Department of Consumer and Business Services announced today.

The decline in costs marks eight years of average decreases in the pure premium rate – the base rate insurers use to determine how much employers must pay for medical claims and lost wages, according to the DCBS.

The numbers illustrate positive, long-term trends, according to the department:

Employers on average will pay $1 per $100 of payroll for workers’ comp in 2021, down from $1.05 in 2020, under a proposal by DCBS. That figure covers workers’ comp claims costs, assessments, and insurer profit and expenses.

The pure premium rate will drop by an average 5.6% under the proposal.

Oregon’s lost-time claim frequency “has generally been decreasing moderately” while the severity of wage-replacement and medical costs “are showing a long-term downward trend,” according to the National Council on Compensation Insurance (NCCI).

Employers’ cost for workers’ comp covers the pure premium and insurer profit and expenses, plus the premium assessment. Employers also pay the Workers’ Benefit Fund assessment, which is a cents-per-hour-worked rate.

The decrease in the pure premium of 5.6% 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 insurers.

“As we move forward with our rate-setting process, we are focused on taking a cautious, balanced approach,” Andrew Stolfi, DCBS director and insurance commissioner, said in a statement. “It’s an approach that accounts for a tough economy and that helps stabilize programs that benefit employers and workers.”

The decrease in the pure premium will be effective Jan. 1, 2021, but employers will see the changes when they renew their policies in 2021. The assessment changes will be effective Jan. 1, 2021.

Oregon’s workers’ compensation premium rates have ranked low nationally for many years. Oregon had the sixth least expensive rates in 2018, according to a nationally recognized biennial study conducted by DCBS. That was an improvement from Oregon’s ranking as the seventh least expensive state the last time the study was done in 2016.


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