Workers' compensation insurance has been called the great compromise between industry and workers.

This compromise was designed to do two things:

• Provide certain but limited aid to injured workers and
• Insulate negligent employers from lawsuits by their employees.

The sure and certain relief part means workers need not prove fault and will get their claims handled quickly.

Insulating industries from worker lawsuits helps business save money and stay competitive. In theory everybody wins.

Besides the Great Compromise, workers' compensation goes by many other labels to include:

Personal injury on the job, workmans comp, workmans compensation, worker compensation, work comp, worker comp, work compensation, workmen's compensation, injury claims, work injury, on the job injury, job injury, job accident, injured at work, hurt at work, workman's comp insurance, disability insurance, workers compensation, and workers comp.

Call it what you will it is a system under attack. Certain elements of the business community would like to let insurance companies in the workers' compensation door.

The Truth About Washington's Workers' Comp System

Workers’ compensation is a complex system to keep operating at the most effective and accountable level. However, recent efforts by the business community to push for reform cloud a nuanced dialogue with distortions and misrepresentations of the facts. This is a disservice to policy leaders, workers, and Washington businesses, all of whom already benefit from a strong system which boasts relatively high benefits with low costs when compared to other states’ systems. 

MYTH:  Our state’s workers’ comp system is broke.

FACT:  L&I did lose money on investments during the recent economic downturn, like many people who had money in the stock market.  But it is not broke.  L&I estimated how much money it will need to operate and dipped into a rainy-day fund to make up for some of the money lost in the stock market.  It did this so that the rate increase in 2009 would be as small as possible for employers, who also have been hurt by the economy.

MYTH:  A private insurance workers’ comp option would be cheaper for employers.

FACT:  Competition may sound good on the surface but private insurance doesn’t necessarily equal lower rates.  Some states already offer a choice of private insurance, such as California, which has the 14th highest workers’ comp rates in the nation.  Washington’s state-run system has rates lower than 36 other states.  Washington’s L&I has done a good job of keeping costs down while taking care of injured workers and their families.

MYTH:  Private insurers will be able to manage claims more economically.

FACT:  Private insurers have one goal:  to make money.  But unlike an insurance company, a state-run L&I system has no need to make a profit for investors, to pay state and federal taxes, to pay commissions to insurance agents and brokers, or to have a marketing budget.  Private insurers typically pay about 55 cents of each dollar earned on commissions and administrative costs.  Washington’s system only spends about 15 cents per dollar earned on administrative costs.  “Reform” would shift dollars from treating injured workers to increasing insurer profits and litigation.

MYTH:  Washington’s workers’ comp premiums are too expensive for businesses.

FACT:  Washington’s premium rates decreased 26 percent between 1990 and 2009.  In 2007, $315 million was returned to Washington employers and employees.  Washington ranks in the top third of states in worker benefits paid, while employers’ premiums ranked in the lowest third. Washington businesses get remarkable bang for their workers’ comp buck.

We agree that the system can be improved and made stronger.  We support efforts to root out fraud and abuse; link doctors, employers and injured workers more efficiently and effectively; and get workers back on the job. 

But rather than tossing out the whole system – and under false pretenses – let’s get together and make some changes.  Our families, small businesses and our state can’t afford to take a gamble on a system that will likely cost more.

For more info: L&I BENEFITS