Salem, OR – The Oregon Department of Consumer and Business Services (DCBS) recently announced that ine 2024, Oregon employers, on average, will pay less for workers’ compensation coverage. The decline in costs marks 11 years of average decreases in the pure premium rate – the base rate insurers use to determine how much employers must pay for medical costs and lost wages.
Underpinning the cost decreases is the success of Oregon’s workers’ compensation system, which includes programs to control costs, maintain good worker benefits, ensure employers carry insurance for their workers, resolve disputes, and improve workplace safety and health.
The numbers illustrate positive, long-term trends, including:
- Employers, on average, would pay 90 cents per $100 of payroll for workers’ compensation costs in 2024, down from 93 cents in 2023, under a proposal by DCBS. That figure covers workers’ compensation claims costs, assessments, and insurer profit and expenses.
- The pure premium rate would drop by an average 6.7 percent under the proposal. In fact, the pure premium will have declined by 49 percent from 2015 to 2024.
The reduction in costs is due to an improvement in loss experience and loss development patterns in Oregon, according to the National Council on Compensation Insurance (NCCI). NCCI is the U.S. rate-setting organization whose recommendation DCBS reviews as part of its annual public process to decide rates.
Employers’ total cost for workers’ compensation insurance includes the pure premium and insurer profit and expenses, plus the premium assessment. Employers also pay at least half of the Workers’ Benefit Fund assessment, which is a cents-per-hour-worked rate.
The decrease in the pure premium of 6.7 percent 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, the pure premium does not take into account the varying expenses and profit of insurers or individual policyholders’ experience modification, if eligible.
The stability of Oregon’s workers’ compensation system helps sustain the trend in lower costs. The system includes the Workers’ Compensation Division; Oregon OSHA; the Workers’ Compensation Board, which resolves disputes over the state’s workers’ compensation and workplace safety laws; the Ombuds Office for Oregon Workers, an independent advocate for workers on workers’ compensation and workplace safety and health; and the Small Business Ombudsman, an independent advocate for small business owners on workers’ compensation.
The premium assessment funds those successful programs.
The premium assessment, which is a percentage of the workers’ compensation insurance premium employers pay, is added to the premium. It would remain at 9.8 percent in 2024, the same as 2023, under the DCBS proposal. In fact, 2024 would mark the third straight year the premium assessment remained at 9.8 percent.
“Oregon has a robust workers’ compensation system that strives to prevent injuries while also providing comprehensive benefits to injured workers and keeping costs low for employers,” said Andrew Stolfi, DCBS director and insurance commissioner. “This system has proven advantageous for everyone.”
Meanwhile, the Workers’ Benefit Fund assessment funds return-to-work programs, provides increased benefits over time for workers who are permanently and totally disabled, and gives benefits to families of workers who die from workplace injuries or diseases.
The fund’s revenue comes from a cents-per-hour-worked assessment. The assessment would decrease to 2.0 cents per hour worked in 2024 from 2.2 cents in 2023. It is the lowest rate since the inception of the cents-per-hour assessment in 1996. Because the Workers’ Benefit Fund assessment is shared by employers and workers – no matter the industry – a reduction in the rate saves money for both groups.
The decrease in the pure premium will be effective Jan. 1, 2024, but employers will see the changes when they renew their policies in 2024.
Oregon’s workers’ compensation premium rates have ranked low nationally for many years. Oregon had the 10th least expensive rates in 2022, according to a nationally recognized biennial study conducted by DCBS.
The cost chart summarizes the changes and includes information about how to participate in the virtual public hearing set for Thursday, Sept. 21, at 3 p.m.: https://www.oregon.gov/DCBS/cost/Documents/wc-summary.pdf (PDF)
More information about Oregon workers’ compensation costs
Source: OR DCBS